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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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The USDJPY is fast approaching the 113.15 resistance area I mentioned in the September 16th weekly forecast. It’s the July swing high and is very near the year-to-date high of 113.38.
You may recall from my post on the 16th that 112.15 was the level to beat. It’s been a pivot for the pair since July 11th. It also capped the September 14th rally.
Here’s what I wrote just two days after that retest of 112.15 resistance:
It appears that 112.15 is the level that needs to break on a daily closing basis for buyers to keep the rally going. A daily close above the 112.15 area would pave the way for a retest of the year-to-date highs near 113.15.
Buyers broke 112.15 resistance last Tuesday and retested the area as new support between Wednesday and Thursday. See the chart below for an illustration of the breakout.
If you’re still long here, you will want to pay close attention to the resistance area between 113.15 and the year-to-date high near 113.40. That’s the next key area buyers need to break on a daily closing basis (New York 5 pm EST) to extend the rally.
If buyers can clear this area on the daily time frame, there isn’t much resistance until 114.35. This region has capped the last three rally attempts since May of last year, so it’s certainly one worth watching.
Alternatively, bearish price action such as a pin bar from the 113.15/40 area could trigger another retest of 112.15 support.
It just so happens that we have a Fed rate decision and presser in less than 24 hours. The rate decision will take place at its usual time of 2 pm EST with a press conference 30 minutes later. As always, expect an increase in volatility around this time.
Events such as a Fed rate decision are best left untouched though. In my opinion, you’re better off waiting for the dust to settle before considering an opportunity.
As long as USDJPY is carving higher lows and higher highs, the uptrend is intact. We can even use the trend line support from the year-to-date low as a way to measure the health of the uptrend. As long as the pair is above it, the bulls are in control.
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