On Sunday I pointed out a possible wedge pattern on USDJPY.
The upper level extends from the year-to-date high near 114.50. It came under pressure on November 28th, but sellers held their ground.
The lower level begins with the August low at 109.77. It connects with the October low at 111.37.
However, wedge support is a little more questionable than resistance.
We saw resistance cap the November 28th advance, but we have yet to see how this support level will hold up.
It may not take long to find out though.
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Today’s session is testing support as I type this. And so far, I am starting to see a few bids crop up near 112.40.
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That said, I’m by no means bullish USDJPY.
In fact, based on what we’ve seen from other yen pairs including CADJPY, I’ll go out on a limb and say that a break lower is the more likely outcome here.
A weaker U.S. dollar would also compliment the potential EURUSD bullish reversal pattern I wrote about on Monday.
As for USDJPY, a daily close below the 112.40 support area would expose downside targets including 111.70 and 110.70.
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Alternatively, bullish price action from this 112.40 area could trigger a move back to resistance near 113.80.
Keep in mind that non-farm payroll (NFP) is on tap this Friday at its usual time of 8:30 am EST.
That will likely trigger an increase in volatility.
I will say, however, that NFP isn’t the market mover it used to be. That doesn’t mean it won’t shake things up though.
In summary, I’m staying relatively neutral here, but I am leaning toward a bearish outcome.
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Leave a Comment:
17 comments
Thanks Justin. Your comments are affirming my bearish sentiments. I entered short at 113.02 as a result
Thank you for the information, it really helps.
It’s my pleasure.
Justin good you 3 much I go short on my demo yesterday and today all went in profit you 3 couch
I am really greatful….you are awesome..
I appreciate the support and kind words.
usd/chf looks like its breaking key area looking forward to seeing it in the daily set up’s :))
This potential falling wedge that you are mentioning becomes much clearer on the weekly time frame
Sorry what I said above is for EURUSD
You make a lot of sense….because the falling wedge on the weekly for EURUSD shows potential soaring of this pair maybe by 1100 pips to the 1.2480 handle…..but this is only an indication……how do you see all this…..
We’ll see. My thoughts are in the post above.
Looking to go long since its 80% long bias
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