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The USDJPY is hovering just below a confluence of resistance.
I wrote about the November 2018 trend line on January 23rd.
If you read that post, you know I wasn’t interested in buying USDJPY. Just the opposite, in fact.
Here’s what I wrote:
To summarize, further losses for the USDJPY seem likely, especially if the pair can close below this trend line as well as channel support just below 108.40.
Fast forward to today, and you can see how the pair is trading below that trend line that extends from the November 2018 high.
Monday also opened with a gap down.
The USDJPY has yet to close that gap at 109.27, but even if it does, I think that region will attract sellers.
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The November 2018 trend line also intersects with the 109.20/30 region.
That makes it a confluence of resistance.
Of course, there’s no guarantee that the USDJPY will close that gap at 109.27 or that the pair will remain below it.
But I am going to remain relatively bearish as long as the pair is below 109.30 on a daily closing basis.
The “daily closing basis” refers to 5 pm EST when using New York close charts, which are essential for trading price action.
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As for support, the 108.40 area could become a factor on the way down.
However, I’ve removed this level from my chart below simply because I’m more interested in the ascending channel support around 108.00.
I think that 108.00 handle will be more significant than 108.40.
And as I mentioned in the January 23rd members-only video, an eventual break below that channel support near 108.00 could send USDJPY even lower.
But for now, the future direction of USDJPY hinges on 109.20/30 resistance.
A daily close back above that area would negate the bearish outlook and re-expose the 109.70 level.