USDJPY has performed beautifully since coming off channel support at 131.00.
That’s where I was getting bullish USDJPY based on the similarities to the price action in January and February.
It’s also where I told Daily Price Action members that USDJPY looked decent for a long entry.
Since then, the pair is up over 800 pips and has broken above the key 138.00 area.
However, attempting to long USDJPY here is risky.
Not only is the pair coming into a key weekly resistance level at 140.30, but it’s also bumping its head on channel resistance from early May.
The channel above is smaller than the first, but it’s still potentially significant.
As such, I think waiting for a pullback into support is the best way to approach USDJPY.
A rounded retest of 138.00 might be appealing, but watching the US Dollar Index (DXY) for cues could also pay dividends.
The DXY broke above the 103.50 yearly open yesterday, suggesting additional strength from the dollar.
At the same time, the dollar index is encountering some selling pressure at 104.20.
So the DXY also suggests a minor pullback from the greenback unless we see the index close above the 104.20 area this week.
I still like USDJPY higher toward 140.30 and 142.00, but the most asymmetric (long) bet requires a pullback into support.
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