Daily Price Action
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USDJPY at Risk of Larger Breakdown Below 107.30

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The USDJPY is plummeting today following another round of safe haven bids. This is something I’ve been discussing for weeks with regard to pairs like the EURJPY and GBPJPY.

Another yen cross we looked at just last week was the AUDJPY. For those who kept track, you know that the pair just retested and sold off from the 85.40 resistance area that I mentioned on Friday.

So how about the USDJPY?

Until today’s price action, the pair has been a laggard among yen pairs. The U.S. dollar caught a bid last week which helped to even the playing field against a surging Japanese yen.

However, that dynamic appears to be shifting, and today’s selloff in the USDJPY is more significant than you may realize.

Here’s why:

USDJPY weekly wedge pattern

Today’s low of 107.40 tested wedge support that extends from the September 2012 low. As of now, that level comes in at 107.50 hence the reason we see some bullish 1-hour candles in this region.

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To be clear, I have no interest in buying the USDJPY. Just like the EURJPY, GBPJPY, AUDJPY, and others, I’m only interested in shorting these pairs. In other words, buying the Japanese yen.

Because the USDJPY is sitting on trend line support as I type this, there is no short opportunity just yet in my opinion. It’s going to take a daily close (New York 5 pm EST) below 107.50 to initiate a short.

That said, it would be prudent to also wait for a close below 107.30 which is the 2017 low. Such a break would expose much lower levels including 105.50 and perhaps 103.70.

As for data points to keep an eye on, Wednesday’s U.S. CPI reading at 8:30 am EST promises to shake things up. It’s going to be a closely watched and highly influential figure given what’s happening with risk assets of late.

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USDJPY key levels on the daily chart

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12 comments
Deos says

Nice analysis, exactly what im expecting. Thanks to have helped me learn to read the charts so neatly. By the way you have not talked much about EURCHF recently, we got the upward sloping flag breakdown and price should move lower after retest. Would you mind giving me your views ?

Reply
    Justin Bennett says

    I probably won’t comment on the CHF. There are better opportunities out there in my opinion.

    Reply
      Pierre Mifsud says

      Regarding the CHF, it seems that CHFJPY is an uptrend

      Reply
        Darius says

        Question for how long. It hit 118.3 twice – once at 2017 june and once recently and now moving down. I shorted chfjpy at 116.302, currently it is 114.93. But now about trendline support. My TP is 114.645 but maybe I should take it even now.

        Reply
Roy Peters says

I’m still in the GBPJPY trade. Thank you Justin for once again……teaching us how to trade. 🙂

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sreyoun007 says

hi

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Maddy says

Hii justin…..
Iam waiting for your analysis on usdjpy from last week…..but the price is trading well below EMAs….may be there should be some consolidation…..anyways thank you once again.

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Sahan says

Thank you.Really good analysis.

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EMMANUEL SAMPENEY says

you are the best analyst i have seen so far.wow

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Faisal says

HI Justin,

Thanks for Sharing this Analysis.
Is it good to short now or we have to wait for retouch the resistance line?

Thanks

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Okoro says

I see formation of Head and Shoulders formation. It should be confirmed by this week

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Yohan says

Thank you Sir!

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