A few hours ago I mentioned how the GBPJPY was teetering on the edge of a broadening wedge pattern that began shortly after the U.S. elections. It appears that level has now broken down.
Its partner in crime- the EURJPY – is making a similar run at key support. This comes just hours before the BOJ takes center stage with its rate decision and policy statement.
The trend line that extends from the November 9th U.S. elections low came under fire for the second time during yesterday’s session. Although it isn’t a long-standing level by any means, it does appear to have played a significant role over the past few weeks.
And given the way buyers have struggled this month compared to last, it seems a failure of support is imminent. Dare I say the level has already succumbed to selling pressure based on the way Monday’s session closed.
If we do get a convincing 4-hour close below this trend line, it would first expose 120.90. This area has served as support on three separate occasions in December including the 1st, 2nd, and 8th of the month.
A break below 120.90 would open the door for a slide back to the current December low at 118.70. This area also played a supporting role on November 24th and again on the 28th and 29th.
Remember that conditions for the yen will likely worsen at some point during the current Tokyo session as market participants weigh in on the BOJ’s decisions. As such, it may be prudent to wait for the dust to settle before considering an entry.
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