On Sunday, I discussed why I didn’t trust the move USDJPY made on Friday.
I also stated that the first 24 to 48 hours of this week would be telling for the risk-sensitive pair.
Here’s the USDJPY segment of that video:
The issue was that USDJPY closed back inside the multi-year wedge pattern that extends from the 2013 lows.
It came following the pair’s false break above the pattern at the end of February.
As I often say, a false break to one side of a pattern usually triggers an extended move in the opposite direction.
That February 27th close below 109.80 was a prime example.
Following that confirmed false break, the USDJPY lost more than 800 pips in just seven trading days.
But then, Friday closed back above that 105.60 area, which is the bottom of the multi-year wedge.
If you’re familiar with the way I approach the markets, you know I don’t always trust Friday moves.
That’s especially true during extreme volatility like we’ve seen over the last few weeks.
And if you watched the entire USDJPY segment of Sunday’s video, you know about the intraday ascending channel here.
Notice how Friday’s session closed just below that resistance level.
Monday then gapped down, and the USDJPY is testing that intraday channel floor near 105.00.
If the pair closes below that channel support, we could see a resumption of the downtrend that began with that February 27th sub 109.80 close.
Key support below that 105.00 area includes 101.50 and the 2016 lows near the 100.00 handle.
Regardless of what you do in these markets, though, be sure to account for the increase in volatility.
We’re no longer dealing with a USDJPY that moves 30 to 50 pips a day.
Friday’s session spanned 400 pips, and today has already covered about 240 pips.
Expect these moves to continue for the foreseeable future.
[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]
Want to watch the USDJPY video I just released in the member’s area?
Get a Lifetime Membership Today and receive exclusive member-only content including one to two new videos every day. Save 40% in March!
[/thrive_custom_box]
