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The USDJPY is testing the key 113.15 handle as new support. This comes just hours before today’s Fed rate decision and statement at 2 pm EST.
I mentioned this level over the weekend as one that needed to hold up for the pair to gain additional ground. The December 8 close above 113.15 means that we should see buyers defend the area as new support.
Earlier in today’s session, we saw the USDJPY bounce from 113.12 on a 4-hour closing basis. But those buyers appear to be in full retreat at the moment.
Today’s FOMC will be the primary driver for the pair over the next 24 to 48 hours. However, it really comes down to where price closes today at 5 pm EST.
A sub 113.15 close would begin to erase last week’s bullish momentum. It would also suggest that sellers are back in control and that a move toward 111.60 is in the cards.
Alternatively, a daily close at 5 pm EST above 113.15 would keep the rally intact. Keep in mind, however, that the (possible) descending channel shown below has an upper boundary near the 114.00 area. Above that, we have the multi-month range top at 114.35.
I’m going to remain on the sideline until the dust settles from today’s Fed decision and statement. I will entertain a short entry if price closes below 113.15 with an initial target of 111.60.
If on the other hand, bulls succeed in driving prices higher, I will wait for a close above the 114.35 area before considering a long position. There’s too much overhead resistance for me to consider buying the pair, even if it closes the day above 113.15.
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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