Apart from the first two sessions of August, USDJPY has gone nowhere this month.
The pair has spent the last 19 sessions consolidating between 105.00 support and 106.80 resistance.
I wrote about these two levels on August 26.
Before the selloff on the 23rd, it looked as though USDJPY buyers were ready to extend prices above the 106.80 resistance area.
However, sellers had other plans.
The pair went on to retest the confluence of support near 105.00 and subsequently rallied nearly 200 pips on the 26th.
All in all, the price action here has been less than appealing in August.
That’s especially true if you’re a swing trading who likes to take advantage of a market’s momentum.
That said, I still maintain the idea that USDJPY sellers are exhausted.
Even the longer-term range on the weekly time frame supports that notion.
In fact, USDJPY is now less than 10 pips away from carving a bullish engulfing week at the 105.00 key support area.
Buyers need to clear last week’s high at 106.73 to confirm the pattern.
If we see that happen, and buyers can break 106.80 resistance on a daily closing basis, we could see USDJPY trend higher toward the 108.00 handle.
That’s the approximate location of the descending channel resistance that extends from the year-to-date high.
Alternatively, bearish price action from 106.80 would likely keep sellers in control a bit longer.
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