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We start today’s commentary with USDJPY, a pair I last traded in early February. Let me start by saying that this is a pure bullish momentum play. Here’s why…
The pair was recently rejected by the 120 area, falling back more than 200 pips in three days. However this market looks to have regained its footing on a 1 hour basis, climbing back above the 119.20 key level.
This level has served as key support and resistance since late last year but has more recently acted as a key inflection point on several different occasions since February 6th (see chart below).
I would like to see, at minimum, a 4 hour close above 119.20 before looking for buying opportunities. Do note that we have the BoJ monetary policy statement tomorrow which may give us enough volatility to see bullish price action form at this level.
If we get continuation to the upside, I will look to pyramid on breaks above the key levels noted in the chart below.
Summary: Wait for the market to retake the 119.20 level on a 4 hour basis and then watch for bullish price action on a retest as new support. Key resistance comes in at 119.80 and 120.50.