On December 22nd, I discussed the potential for a bounce from USDJPY at the 130.60 support area.
We got the short-term bullish move over the next few days right into the 134.20 target I mentioned to Discord members and the subsequent bearish reversal from that region.
We also looked at the USDJPY 130.60 key support level just two days ago.
That was a must-hold level for bulls, which they managed to defend on a daily closing basis.
As mentioned on Tuesday, the On Balance Volume (OBV) showed bullish divergence.
Here’s what I mean:
Notice how the 4-hour OBV has made higher highs and lows since December while the USDJPY price has trended lower.
It’s a perfect example of bullish divergence foreshadowing this week’s 300-pip rally.
Note: I use OBV instead of RSI as the former uses price and volume in its calculation, whereas RSI only uses an asset’s price.
So where is USDJPY likely to trend from here?
Currently, the pair is testing the October descending channel resistance at 133.75.
USDJPY bulls need to clear that and the 134.50 horizontal area on a 4-hour and daily closing basis to open up higher prices.
One such price that could become a target is the 138 region.
Notice how USDJPY pivoted around 138 between mid-November and December.
That area will also become the 370-pip measured objective of this potential double bottom if bulls can break the 134.50 neckline.
But until then, 133.75 and 134.50 are resistance for USDJPY.
