Want Free Access
to the same
"New York Close"
Charts I Use?
FREE BONUS: Get my 6-step swing trading cheat sheet
USDJPY buyers struggled to break through 112.00 resistance earlier this week.
I mentioned this in my March 5th commentary.
As a sign of just how strong the 112.00 resistance area is, USDJPY carved a sell signal between the 4th and 5th.
The inside bar pin bar combination doesn’t occur often, but when it does, it’s usually worth paying attention.
I pointed this sell signal out to members as part of our trade idea for the pair. However, we were cautious in our approach given the pair’s bullish momentum so far this year.
That sell signal has worked out beautifully so far.
USDJPY is off this week’s high by more than 100 pips and is in the process of breaking key support.
Get daily Forex setups and lessons from me on WhatsApp.
Text "Join" to +1-240-778-3679 (save this number in your phone's contact list)
It isn’t the best looking rising wedge, but the formation you see in the chart below could be enough to send the risk-sensitive USDJPY even lower next week.
That’s especially true if the S&P 500 continues its decline. I wrote about the S&P on March 6th.
The objective for any rising or falling wedge is the pattern’s inception point.
In the case of USDJPY, that’s the January 31st low at 108.50.
So if sellers can clear the 111.00 handle today, we may see the pair slide an additional 200 or more pips over the next few weeks.
Keep in mind, though, that there are no guarantees.
Trading is a game of probabilities. So while the likely path forward points lower today, it’s still essential to position size correctly.
Sellers also need to secure a close below 111.00. We haven’t seen that yet, so it’s something to be mindful of as we enter next week.
Key support on the way down comes in just above the 110.00 handle. In fact, that area may extend as high as 110.40.
One last note about the objective here…
I would use the area above 108.50. Notice how the 108.70 area served as a pivot throughout January.
The 108.70 level also supported prices in May of last year.
All in all, I will remain bearish USDJPY while below the 112.00 resistance level. A close below 111.00 today would further support my bearish outlook for next week.
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...
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.