On November 18th we discussed the idea that a 250 pip range on the USDJPY could present a favorable buying opportunity. At the time there were two ways in which this could happen.
The first was a rotation back to the 109 handle. The level served as former channel resistance that extends from the pre-Brexit high.
The second option was to wait for the pair to clear the 111.40/80 region. This area includes two swing highs, one in late April and the other in May as well as several lows between February and March.
While a rotation to support at 109.00 never materialized, the pair did close above the 111.40 handle just three sessions later. This break left us watching for buying opportunities on a pullback to value.
Sure enough, today’s low (so far) is 111.35. Sellers managed the print right before buyers sent prices 125 pips higher toward 112.60, which is the current price at the time of this writing.
Depending on your trading style, this retest could have offered an opportunity to get long. However, because I mostly trade based on daily signals, I didn’t pull the trigger here.
And as convincing as today’s bounce may look, the session is far from over.
But that doesn’t mean an opportunity won’t materialize in the coming days. Provided buyers manage to keep prices above 111.40/80 on a daily closing basis; the bullish bias is intact, and resistance at 114.55 remains exposed.
I’m on the sidelines for now and will likely wait to see how the next few sessions play out. Any bullish price action near 111.40/80 or intraday continuation pattern would pique my interest.
Want to see how we are trading this setup? Click here to get lifetime access.