The USDJPY just closed the week below an eight-year trend line.
I mentioned this level on December 9th, where I stated that a weekly close below 103.60 would open the door to 101.00.
That’s the location of the trend line from late 2012.
We also looked at how USDJPY reacted to this level on December 15th.
If you’re a lifetime member, you know the December 14th candle was not a bullish pin bar for buying.
In fact, I told DPA members that I was only interested in shorting USDJPY.
There were three reasons why the December 14th candle wasn’t a buy signal.
First, USDJPY has been carving lower highs since February.
Even the massive 1,050 pip rally in March failed to carve a higher high.
As long as those lower highs persist, sellers are in control.
Second, the way USDJPY was “weighing” on the 103.60 area signaled that a breakdown was imminent.
I sometimes call this “heavy price action”.
It can be beneficial in determining whether a market is about to break lower or not.
The third reason why USDJPY hasn’t been a buy is that the pair has been sideways since November.
Any bullish candle like the December 14th pin bar is insignificant without momentum.
USDJPY broke 103.60 on Wednesday and retested the area as new resistance on Friday.
As long as the pair stays below that area next week, I like the idea of looking for shorts.
The move lower is likely to be full of retracements, but I continue to like USDJPY toward 101.00, as I have for months.
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