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USDJPY About to Break a 20-Year Level?

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I posted the other day about USDJPY flirting with disaster. Of course whether it’s actually a “disaster” really depends on which side you’re on when the time comes 😉

Regardless of whether you’re a USDJPY bull or bear, there’s a question that I think we can all agree is common ground – how important is the bottom of that wedge on the daily chart?

How about a level that goes back 20 years? That “0” isn’t a typo. The 101.50 level has been playing an important role since 1994! In addition to the monthly chart below, I’ve also included a daily chart at the bottom of this post to illustrate where the two lines intersect.

Just to be clear, this isn’t to say that the USDJPY will break down from here. I would never make that assumption, especially without some price action confluence to back it up. The 101.50 level is still holding as of yesterday’s close, so there’s always the chance that the pair rebounds from here.

Having said that, if I had to pick a directional bias I’d be bearish. The simple fact that price action has been hugging the bottom of the wedge on the daily chart leads me to be more bearish than bullish.

I’m on the sidelines until a clear price action setup presents itself.

Click the image to expand.

usdjpy monthly chart

USDJPY daily chart. Notice where the monthly level lines up with the bottom of this wedge…

What do you guys think? Is it just coincidence or is the market telling us something?

usdjpy price action daily chart

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12 comments
2face says

It will be better to break it down to 1H TF as of moment cause its on strong level. Any break will confirm where its heading to

Reply
    Justin Bennett says

    Thanks for commenting 2face. The USDJPY hourly chart is all over the place with regard to this level.

    In my opinion it’s better to play a break on the daily time frame to reduce the chance of a false break, which the Yen pairs love to do.

    Reply
2face says

Very difficult, but we need to follow the price. Im seeing the level to hold now, maybe fundamental will play a major role here

Reply
    Justin Bennett says

    True. As always, only time will tell.

    Reply
2face says

While we wiat, analyse other pairs

Reply
    Justin Bennett says

    Busy day my friend. Trying to get the Forex stop loss strategies lesson out tomorrow.

    Enjoy your weekend!

    Reply
Colin says

Yep there is nothing wrong with waiting and seeing what the market is actually going to do. So often I used to jump in for fear of “missing the boat”. I have figured it out over the last 1.5 years or so that my profitability/ pipage at the end of the week is highly based on the trades I don’t take instead of just the trades I do take. Being selective and waiting, waiting and waiting some more for actual breakout is what will do it for me. I may end up missing out but there is always more trades setting up in the pipeline.

Reply
    Justin Bennett says

    Well said, Colin. This is why I cringe when I hear others suggest that a beginning trader start with just one currency pair. That’s the shortest path to over-trading in my opinion.

    By having at least a handful of pairs to watch affords one the ability to be much more selective in the setups they act on.

    Reply
      Colin says

      For sure – just like stock traders who have their “watch list” for the week so do we. I may see 10/12
      potential set ups for the week BUT I only want the BEST of those set ups and when you widdle them down during the week ya end up with maybe 2-5.

      Reply
Lloyd says

The wedge continues to tighten on the USD/JPY.

Reply
    Justin Bennett says

    Yes, and at the moment it’s sliding along the top side of a wedge on the 4 hour chart.

    Reply
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