The USDJPY has just completed a textbook retest of a new resistance level. We looked at the 105.50 handle on Thursday of last week. At the time, it was still serving as support.
However, by Thursday’s close at 5 pm EST, the pair had fallen below 105.50. Friday’s session took the USDJPY even lower which left us watching for a retest of the area as new resistance per Sunday’s weekly forecast.
The pair reached a high of 105.47 on Monday, but the lack of bearish price action left me on the sideline.
Fast forward to today and we can see that, after forcing an intraday high of 105.90 during yesterday’s session, buyers failed to close the day above 105.50.
The selling pressure between 105.50 and 105.90 has left us with a bearish pin bar. Although the range of Tuesday’s move isn’t quite as extensive as I’d like, the pin bar shape, bearish momentum, and key level are all there.
Furthermore, the recent intraday spike above 105.50 has helped reset things. Last week I mentioned how well the pair has responded to the 10 and 20 daily EMAs since late January. Yesterday’s rejection appears to be a continuation of that pattern.
As long as the USDJPY trades below 105.50 on a daily closing basis (New York close chart), I will stay bearish. Key support comes in at 103.70.