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.
Want to watch the USDJPY video I just released in the member’s area?
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