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USDJPY continues to consolidate following the January 3rd flash crash.
We had a great run in December and USDJPY was one of our best trades. The wedge that broke down in mid-December played out perfectly.
Moves like the one in early January tend to act as a natural pause button for the market. Things can slow down for weeks or even months.
In my opinion, the January 3rd flash crash is the primary reason the market has been relatively slow so far in 2019.
There’s no telling how much longer it might last. However, technical patterns like the one below could offer clues.
What’s interesting about USDJPY is the less steep resistance level you see below.
The pair is not carving an equidistant channel. Instead, it appears to be forming a rising wedge pattern of sorts.
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Either way, a close below support could open up downside targets. Those include 107.60 followed by the year-to-date low of 105.60.
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Bear in mind too that this pattern could be in its early stages. It may take another few weeks before we see something favorable materialize.
I may also need to adjust the levels you see below depending on how USDJPY reacts to both support and resistance over the coming sessions.
But for now, the pattern looks promising especially given how sleepy the markets have been so far this year.
It’s going to take a daily close below support near 109.00 to expose 107.60. A daily close below that would open the door to 105.60.
On the flip side, a retest of 110.30/40 resistance next week would attract sellers.
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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