The USDJPY reached a key inflection point earlier today.
We’ve been talking about this rising wedge that extends from the year-to-date low since October 31.
I also highlighted the possible bullish and bearish scenarios that could play out here on Tuesday.
If you read that post, you know that I favored the bearish scenario.
Here’s what I wrote on Tuesday:
As you can see, the USDJPY has a decision to make.
That said, I do favor the bearish scenario via the rising wedge simply because upward breaks of ascending levels rarely last, in my experience.
Think about if a bearish flag pattern broke to the upside.
Would you trade it?
Probably not. The same goes for a rising wedge like the one below.Quote from Tuesday’s post
I also told Daily Price Action members a few days ago that a daily close below 108.96 would be a sign of weakness, in my opinion.
That was the pair’s closing price on October 28.
The USDJPY also encountered sellers around 108.96 on the 29th and 30th of October.
Notice how buyers then closed the pair above 108.96 on November 5, at which time the level began serving as support.
Wednesday’s 108.81 close was the first sign that sellers may be regaining control.
However, a daily close below wedge support at 108.65 is needed to confirm the rising wedge and also expose lower levels.
One of those support levels will be the neckline I wrote about on Tuesday.
At the moment, that level comes in near 107.50.
A close below that would re-expose the 106.80 support level.
Just remember that until the USDJPY closes the day below 108.65, that area will continue to attract buyers.