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.
The USDJPY is testing a significant resistance area today.
The 109.00 region has served as a pivot for the risk-sensitive pair since January.
As you may well know, support and resistance are often areas or zones rather than exact prices.
I would argue that this 109.00 area extends as high as 109.30 and as low as 108.80.
So far, today’s high is on the upper end of the range.
But I want to focus more on what’s happened since today’s 109.31 peak.
While the session is far from over, you can already see how USDJPY has come under immense pressure since reaching just above 109.00.
In fact, the pair is still sliding as I type this.
The market is also in the process of carving what could be a bearish rejection/engulfing candle.
However, today’s close at 5 pm EST will have the final say.
Most of what occurs intraday (between the 5 pm EST open and close) is irrelevant. It’s why I mostly focus on the daily time frame.
So, with that in mind, it’s essential to wait for today’s close at 5 pm EST before making a decision here.
If USDJPY closes at or near session lows, I will be interested in shorting the pair on a 50% retracement of today’s range.
On the other hand, if the pair manages to take out that 109.00 area and closes green, I will have to change my outlook.
I’m staying somewhat neutral for now given the wild swings in risk assets (which tend to influence the yen) since Wednesday’s FOMC.
That said, I’m certainly leaning toward a bearish scenario given today’s price action thus far.
Key support comes in at 106.80 but I do expect recent lows at 107.20 to attract buyers as well.