Last week I mentioned the ascending channel that had formed on the USDJPY 4-hour chart. At the time it appeared as though the pair was gearing up for a run at the key 104 level. However, sellers had other plans for the pair and capped the advance at 102.65.
Fast forward to today and we can see that the USDJPY has broken channel support ahead of tomorrow’s FOMC meeting minutes. The breakdown came after eight sessions of prices hovering just above the level.
From here traders can watch for a retest of former support as new resistance near 101.00. A move lower is likely to find support at the post-Brexit low of 99.00. Note that this level will vary depending on your broker due to the extreme volatility on June 24th.
A break below the 99.00 area would expose the November 2013 low at 97.60 followed by the October 2013 low at 96.57. Alternatively, a close back above the former support level would negate the bearish bias.
One thing that will keep me on the sidelines for the next 24 hours is the upcoming FOMC meeting minutes. The release is scheduled for Wednesday at 2 pm EST and is likely to trigger an increase in volatility for the US dollar.
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