January 26, 2026 Moty Levanon, Technical Analyst
Recent market activity provides a profound lesson in the importance of Price Action over mainstream financial narratives. While traditional commentary continues to label the surge in Gold prices as a byproduct of market fear or a flight to safety, the actual price behavior tells a different story. With Gold and major equity indices hitting all-time highs simultaneously, we are witnessing the collapse of the traditional inverse correlation and the rise of a structural shift in the monetary system.
HIGHLIGHT THE JAPANESE PATTERN AND THE BREAKOUT GAP
Price Action and Correlation Analysis
From a technical perspective, the synchronized rally in risk assets and hard assets indicates that the market is not pricing in classic market risk but is instead performing a real-time audit of currency value. In Price Action terms, Gold is no longer competing with stocks; it is competing with Treasury bonds for the status of a risk-free asset. We see further evidence of this in the returning correlation between the Australian Dollar (AUD) and Gold. After a period of decoupling, the price is once again aligning with real-world fundamentals.
USDJPY: The Japanese Pattern and the Rare Breakout Gap
The USDJPY pair is currently the most critical theater for observing these structural shifts. While institutional forecasts provide a macro backdrop, the Japanese Candlestick patterns on the higher timeframes are offering the most objective data. Specifically, we have been tracking a significant Japanese price structure that has reached a point of culmination.
The most striking feature in the recent Price Action is the breakout of this Japanese pattern through a Gap. In the Foreign Exchange market, Gaps of this magnitude are relatively rare due to the continuous liquidity and 24-hour nature of the market. When a major Japanese pattern is breached not by a gradual candle expansion but by a Gap, it signals an extreme imbalance between supply and demand.
This Breakaway Gap through the pattern boundary suggests that the market has bypassed the usual order matching process, reflecting a sudden and violent shift in institutional positioning. This represents a total rejection of previous price levels and often marks the beginning of a powerful new trend for 2026. The rarity of such a Gap in FX underscores the conviction behind the move.
Beyond the technical breakout, major financial institutions are currently updating their 2026 projections. The interplay between Japanese Candlestick signals and these fundamental targets is crucial:
Currency Appreciation Scenario: Some institutions forecast that narrowing interest rate differentials and continuous Gold accumulation by central banks could drive the pair toward the 130 to 135 range during 2026. The Gap breakout we observed provides technical weight to this bearish momentum.
Persistent Dollar Strength Scenario: Conversely, analysts emphasizing US inflationary pressures suggest the pair may find support above the 145 level. However, for this to hold, the Price Action must fill the recent Gap, which currently acts as a formidable structural resistance zone.
Summary
The market in 2026 requires us to abandon outdated definitions. Gold is no longer merely a fear gauge; it is a barometer for trust in the monetary framework. By following Price Action, the rarity of Gap breakouts in FX, and these renewed correlations, we gain a clear view of the market structure. We focus on what the smart money is actually doing through the charts, overriding the intuition of large institutions.
Legal Disclaimer: The content in this blog is provided for educational and informational purposes only and does not constitute investment advice, a recommendation to trade financial assets, or a substitute for professional consultation tailored to an individual’s specific financial situation. Market and chart analysis involves significant risk of financial loss. Any action taken based on the information in this review is done at the user’s own discretion and sole responsibility. The author is not liable for any damages or losses arising from reliance on the content presented herein.
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