The USDJPY has been trading in a 600 pip range since March of 2017. The majority of last year was marked by swing highs at 114.40 and lows at 108.50.
However, since carving a bearish pin bar on November 6, 2017, the pair has entered a different type of consolidation.
Beginning with the November 6 high from last year we have trend line resistance. The level came under fire just yesterday, but sellers held their ground and are quickly pushing prices toward key support.
That brings us to the trend line that extends from the November 2017 low. Compared to resistance, the lower trend line isn’t as defined. As such, it’s validity will depend on how the pair reacts near 112.30/40 over the coming sessions.
Other considerations include horizontal support at 112.00 and resistance at 113.65. I mentioned both of these levels over the weekend.
This is one case where I may drop down to the 4-hour chart once we get a break. But it all depends on whether or not we get a ‘clean’ break of the wedge below followed by confirming price action. In other words, a clear breakout combined with a pin bar.
For now, I’m just waiting to see how the USDJPY reacts to trend line support at 112.30/40. If bids develop in that region, it’s a good sign that the lower level of this wedge is valid and thus a breakout could offer a favorable opportunity.
Below the 112.00 support handle we have the November 2017 low at 110.85. The space above 113.65 resistance isn’t quite as accommodating given the multi-month range top at 114.40.