The November 9th U.S. elections had a drastic effect on the USDJPY. In just 26 trading days the pair garnered more than 1,700 pips, making it one of the most aggressive rallies since late 2014.
However, since topping out at 118.65, the pair has been unwinding in rather volatile fashion. So far the USDJPY is off its recent highs by 700 pips.
But this pullback is coming into a couple of key support areas that could at least offer some respite for the bulls.
The area between 111.00 and 111.40 has been a key pivot for the pair for the last 12 months. This region is also the location of the 38.2% Fibonacci retracement from the 2016 low to the December 2016 high.
And even if sellers manage to break the 111.00 handle, we have former channel resistance that should now act as support near 110.00.
Whether buyers get enough support in this region to resume the recent bull trend is yet to be seen. What I will say is that if this pullback is indeed corrective, the 110.00 to 111.00 area is the most likely turning point.
With this in mind, I’ll be on the lookout for bullish price action on a retest of the 111.00 area over the coming sessions. But because of the recent bearish momentum, only a quality buy signal such as a pin bar will be enough to grab my attention.
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