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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
On Monday I wrote how Monday’s gap down on USDJPY could leave the pair vulnerable.
But it was more about the 111.00 handle than the act of gapping lower.
You can see how 111.00 has served as a pivot for USDJPY since mid-February.
In fact, the level has played a critical role here since 2017.
Monday’s session not only closed below 111.00, but it also failed to close the gap left by Friday’s 111.10 close.
All in all, things looked pretty bleak for USDJPY.
Fast forward to today, and the risk-sensitive pair is already off its weekly high by 140 pips.
It’s also testing the next key support level at 109.70. I mentioned this level in Monday’s forecast.
For those who entered short earlier in the week, the USDJPY is playing out perfectly.
However, if you missed it, this one is getting away from you, and you certainly don’t want to chase.
Sellers need to secure a daily close below the 109.70 area to keep the bearish momentum intact.
A daily close above 109.70 today could trigger a bit of a relief rally.
But if USDJPY bears do manage a sub 109.70 daily close, it would expose the next key support area at 108.70 and perhaps 107.60.
The latter is the closing price of the January 3rd flash crash.
It all comes down to today’s 5 pm EST close, though.
Shorting USDJPY intraday at these overstretched prices is far too risky in my opinion.
It’s better to wait it out and see where today closes in relation to 109.70.
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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