Daily Price Action

USDJPY Confirms False Break, Targets 106.80


On February 21st, I wrote about a USDJPY breakout from wedge resistance.

The level in question dates back to the 2015 high, while the bottom of that wedge extends from the June 2013 low.

As you can tell, it’s a significant wedge pattern.

One thing I’ve said in every USDJPY video I’ve made for members since that breakout was, “unless this is a false break”.

I always respect the potential for false breaks regardless of how enticing the initial breakout appears.

The fact is, false breaks are signals too.

In fact, they can produce some incredibly aggressive moves.

With that in mind, I was very open to the idea of a daily close back inside this wedge pattern around 109.80.

I wrote about that idea on February 25th.

We’ve also been discussing a bearish USDJPY scenario all week in the Daily Price Action member’s forums.

As you can see, the USDJPY has already confirmed that false break by closing below 109.80 on Thursday.

And as of this writing, the pair is on track to close the day, week, and month below the short-term ascending channel bottom near 109.00.

I also mentioned this level in the February 25th commentary.

That means the next likely stop for USDJPY is 106.80.

Notice how 106.80 has been a key pivot for the pair since June 25th of last year.

However, as I just mentioned to members, that 106.80 area might only trigger a temporary pause in the selling.

False breaks, especially one of this significance, usually produce extended and aggressive moves in the opposite direction.

In other words, we could very well see the USDJPY trend toward the bottom of the multi-year wedge pattern, somewhere between 105.50 and 106.00.

A break below that would target the 2016 lows near the 100.00 handle.

This is my base case for the USDJPY as long as the pair trades below new resistance near 109.50 on a daily closing basis.

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USDJPY false break on the daily time frame

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Justin Bennett says

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Sifiso says

The big boys just bought the yen 3 times this term…look at Audyen, gbpjpy, and nzdyen. You will notice a similar pattern. Only the dollar yen looks otherwise( not in sync with the big boys market structure). In light of this I strongly believe that traders should stay away from the dollaryen and trade the yen in pairs that have clear footprints of the market movers. I for one am very keen on buying the Audjpy or the pound yen or the nzdyen..I plan to do this early March..I’m just waiting for a daily chart reversal pattern on those pairs..then I will load my buys. Notice how I am marrying price and TIME. If those two do not marry, I’ll simply pass on those trades.

    Roy says

    sifiso please join us in the member’s area. it’s a well-paid investment to become profitable. we await you, sir.

      Sifiso says

      How I would love to be a member of a successful trading community. Had I not have already acquired a trading strategy that is well tailored for my personality and that has a pretty good mathematical outcome( “the egde) over the markets. I’m already a profitable trader buddy.

Bon says

I wouldn’t recommend anybody buying or selling USDJPY in mid channel weather going up or down. I buy it only at bottom of the channel or top of the channel. I will agree with the comment above it’s not in synch with other JPY pairs.

    Sifiso says

    Hi Bon. I have noticed that the usdyen drop was driven by the yen bieng bought. See the Audyen and the nzdjpy…they all dropped. This suggests selling from big banks. This should then entice momentum chasers short. Then banks cover their shorts ( buy back)taking profits and ultimately reversing those pairs leaving the new and late retail sellers with a rising market. Smart money mind games in play here.

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