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We’ve been discussing USDJPY for several weeks now. First when the pair was nearing the final days inside the terminal wedge as well as August 19th when the pair broke free from 8 months of consolidation.
Upon breaking out of this consolidation we were originally looking for a pullback and retest of the 103.10 to 103.30 area in order to get a more favorable entry.
However as time passes and this market continues to hold its ground the likelihood of such a pullback is growing smaller.
As we’ve come to expect from USDJPY, the pair has started to form a bullish wedge on the 4 hour chart. We can therefore use this pattern to our advantage in our search for a long entry.
Summary: Wait for a break and close above the wedge on the 4 hour chart. Buy on a retest of former resistance. Because this rally is so strong, I will be trading this blindly. In other words I’m not requiring bullish price action. A retest of former wedge resistance will be enough to trigger a long entry for me. Key resistance comes in at the year open around 105.30.
Note: If the bottom of this wedge breaks first, even better. That simply means that we’ll get a better entry – possibly between 103.10 and 103.30.
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