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A few days ago I commented on a potential USDJPY rising wedge.
It was an early stage pattern without much structure, so there was a good chance it would need to be modified.
That’s what we’re seeing so far this week. The pair has broken above the 110.00 area and is fast approaching a key resistance zone between 111.40 and 111.70.
USDJPY has seen a lot of reversals from this area since early 2016.
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However, there are no guarantees sellers will be able to defend 111.40/70 if tested over the coming sessions.
A study of the price action since mid-2017 shows a range bound market.
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So despite the aggressive 700 pip breakdown that occurred in December, there is little to no longer-term momentum here.
That range extends as high as 114.50 and as low as the year-to-date low at 105.60.
That’s a lot of chart to analyze, but it’s important to keep the range in mind in case you’re thinking of selling USDJPY sometime soon.
For now, a retest of the 111.40/70 resistance area followed by bearish price action such as a pin bar could push the pair back to 110.00 support.
Alternatively, a daily close above 111.70 would extend the current rally.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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