Risks skewed to the upside after Wednesday's inside day candle

USD/JPY printed a bullish inside day candlestick pattern on Wednesday.
The pair could find bids and challenge resistance at 110.70-111.00.

USD/JPY is currently flashing red near 110.30, having hit a low of 110.19 a few minutes ago. The recovery could be extended further, as Wednesday’s inside day candlestick pattern indicates the path of least resistance is to the higher side.

The currency pair eked out moderate gains on Wednesday, snapping the three-day losing streak. More importantly, the pair traded well within Tuesday’s range, forming an inside day candle, a sign of indecision or consolidation in the market place.

A green inside day candle following a notable price drop often foretells a bullish move. In USD/JPY’s case, the candle has appeared following a three-day drop.

As a result, a move higher toward Wednesday’s high of 110.70 and possibly to 111.00 cannot be ruled out.

The bullish case would weaken if the spot finds acceptance 110.13, which marks the low of the inside day candle.