Daily Price Action
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USDJPY Consolidation Coming to an End?

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

Trying to make sense of the USDJPY has been no easy task lately. The pair has been difficult to analyze for the better part of the year. Even the rally that began in June was choppy and difficult to read.

It’s why I’ve spent most of my time focusing on other markets. Why waste time on a currency pair with no clear direction or levels when there are other more favorable pairs to trade?

However, since topping out in mid-July, the USDJPY has been trying to untangle itself. A look at the daily time frame shows what appears to be a falling wedge that started developing earlier this month.

Whether this pattern has any significance is unclear at this point. It may be a catalyst for a move back to the year to date highs near 113.20, or it may be more choppy price action with no real impact.

What I do know is that the pair is challenging wedge resistance as I type this. At the moment, that level comes in a few pips shy of the 111.00 handle.

A 4-hour close above this area at 110.90 could trigger additional buying pressure. Of course, a daily close above it at 5 pm EST (using a New York close chart) would be ideal.

If buyers can manage to break wedge resistance near 110.90, a retest of the area as new support would likely attract a bid. Key resistance above that comes in at 112.15 followed by the current 2018 highs near 113.20.

Take extra precautions if you decide to trade this one though. As I mentioned above, the pair has been relatively unfavorable for the better part of 2018. I’d be surprised if things clear up suddenly following a break of this wedge pattern.

Then again, the indecisiveness has to end somewhere, so why not following a breakout here?

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USDJPY falling wedge pattern

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11 comments
Econiumworld says

Thanks Justin. 111.47 is also a resistant. God bless your knowledge sir.

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    Justin Bennett says

    You’re welcome.

    Reply
Jeff says

I drew a price support line at 109.730, which was just below a .618 retracement from the July 18th high at 113.177, and entered long at 110.592. Currently up 60 pips. My tgt is the 1.618 extension at 116.293. Great risk/reward ratio assuming I’m correct.

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Zakhriddin says

Just yesterday i was analyzing this pair and noticed possible bullish trend continuation.However,my opinion is that we either have wedge or bullish flag forming right now.In case of wedge,i agree that close above 110.90 would cause bullish bias,in case of flag,one should wait for close above 111.15.It is not so critical but anyway wanted to share.Thanks.

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    Justin Bennett says

    Thanks for sharing!

    Reply
Abraham says

Thanks for your good job but Sorry what should happen to EUR/AUD

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    Justin Bennett says

    You’re welcome. Need to wait and see for EURAUD.

    Reply
Deos says

Hi Justin, this pair appears to be in a descending flag (we can see that if we zoom in the w1 chart) since december 2016, flag which got breakout of resistance in late july 2018, seems like we have just got the retest of former flag resistance as new support.

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    Justin Bennett says

    Thanks for sharing.

    Reply
Rose says

With your comments on USDJPY, I agree that now bias bull.

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James Kihara says

These are very great insights here… And I have a question, how do you track your profits??

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