The USDJPY is testing a multi-year trend line from the 2015 high.
The level connects with the February 2020 high, which preceded the March decline that sent the USDJPY 1,000 pips lower.
As you can see, the market is challenging the resistance level today just above the 109.00 handle.
Whether you see today’s retest as a selling opportunity or an upcoming bullish breakout depends on your outlook.
I have a relatively neutral stance at the moment.
A close above 109.30 could offer an attractive buying opportunity.
On the other hand, bearish price action on the weekly chart could send USDJPY lower.
However, the daily chart may offer some clues.
Notice how USDJPY is consolidating below 109.30 on the daily time frame.
That may be an indication of an imminent break higher.
Usually, consolidation just below a key resistance level is bullish.
We’ll have to wait and see if that’s the case here, but so far, I have no reason to be bearish, much less short the USDJPY.
If buyers can clear 109.30 resistance next week, it could send the pair toward the 2020 high at 112.00.
Alternatively, bearish price action from the 109.30 region could offer an opportunity to get short.
That said, the bearish signal would need to occur on the weekly chart to help offset the bullish momentum we’ve seen since January.