USDJPY has followed through beautifully from the February 3rd bullish breakout.
I covered this descending channel and the resulting breakout several times, and USDJPY hasn’t disappointed.
We even saw bulls secure a close above 132.90 on Tuesday, which opened up the next key resistance at 134.40.
That 132.90 level should be familiar to those who watched last week’s forecast as it’s the level bulls had to break to continue the rally.
Now USDJPY bulls are faced with a new test at 134.40.
The area has been a pivot for the pair since December, acting as support until the December 20th breakdown, flipping 134.40 to resistance.
We’ve seen USDJPY test this level for the last three sessions, including today’s brief spike above it.
But as many of you know, a daily close (using New York close charts) above 134.40 is needed to confirm the breakout.
A daily close above 134.40 opens up the next key resistance at 138.00, offering another 360 pips of bullish potential.
If we see today close below 134.40, the level remains as resistance for next week.
Remember, too, that Friday breaks can be deceiving, given the lack of volume.
So if USDJPY does close above 134.40 today, it wouldn’t be a bad idea to wait for Monday’s close to confirm the breakout.