On October 7, we looked at a potential 400-pip reversal pattern on the USDJPY daily time frame.
At the time, the pair was trading just above the 106.80 support level.
Notice how 106.80 supported USDJPY on June 25 before flipping to resistance throughout August.
As you can see, the pair rallied 200 pips from that 106.80 level earlier this month.
The USDJPY also confirmed the inverse head and shoulders pattern on October 11.
However, since reaching the 109.00 resistance area last week, the market has struggled to find its footing.
Today marks the sixth day of consolidation following the early October rally.
But that shouldn’t be a surprise.
No market moves in a straight line, and USDJPY buyers were always likely to struggle in the 109.00 region considering its significance.
This recent consolidation also looks constructive, at least so far.
In fact, the price action has even formed what could be a bullish flag pattern on the intraday time frames.
I just shared that price structure in today’s members-only video.
As long as the USDJPY is above former neckline resistance on a daily closing basis, I favor a move higher.
A bullish breakout from this consolidation would re-challenge 109.00 with a close above that exposing 110.60.
My objective for USDJPY remains the 112.30 region.
Just remember that nothing is guaranteed, and buyers still need to get past 109.00 and 110.60 on a daily closing basis (using New York close charts) first.
Alternatively, a close back below the neckline near 107.80 would negate the bullish outlook for the USDJPY.
It would also re-expose the 106.80 key support level.