USDJPY bulls aren’t wasting any time this week.
The pair has already taken out last weeks high and is currently challenging the October high at 108.93.
This follows the pairs 200 pip rally from the 106.80 support area.
A move higher from the USDJPY is also something we’ve discussed for several weeks based on the inverse head and shoulders pattern here.
But if USDJPY bulls intend to keep this rally alive, they’re going to need to secure a daily close above the 109.00 handle.
This is something I discussed in Saturday’s Forex forecast video.
Notice how 109.00 served as support on May 13 before flipping to resistance following the May 31 close below it.
Since then, the 109.00 area has attracted sellers.
The USDJPY has also failed to close back above 109.00 following the May 31 breakdown.
As such, taking out the 109.00 resistance area will be no easy task.
But I do like what I see so far from USDJPY buyers.
The pair has already confirmed the inverse head and shoulders and is still carving higher highs and higher lows.
Furthermore, last week’s consolidation looks constructive and could garner the attention of would-be buyers this week.
We’ll have to wait and see if this constructive price action warrants a close above 109.00.
If so, the USDJPY could trend higher toward 110.60 with a close above that exposing the measured objective near 112.30.
As I pointed out on Saturday, though, a move below the recent consolidation near 108.20/30 would be a red flag for potential buyers.
In summary, the USDJPY remains somewhat vulnerable while below 109.00, but the price action continues to favor longs, in my opinion.