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USDJPY Consolidation Could Offer Breakout Opportunity

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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.

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USDJPY wedge pattern on the daily chart

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10 comments
Mohammed A Dakheel says

Ly

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Kenneth says

Hi Justin, I see two triangles on this pair,the big one and the small one you analysed. I like you analysis and frequent updates.How do I get to join your membership area?

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RV says

Hi Justin….. I have a question when you say “for now I am just waiting to see how the usdjpy reacts to the trend line support at 112.30/40 ………….”. In Above sentence when you say “if bids develop in that region” what is happening in background, are we talking about some buy orders getting stopped out or the opposite. Can you please throw some light on what is happening in background when you make above comment. Thanks for sharing good information as always….RV

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    Justin Bennett says

    Sure. So one thing I like to do is just watch how the market reacts to a given level. In the case of the USDJPY, if I see price bounce near 112.30/40 (as it just did), then I know it’s a level worth watching. It also ‘completes’ the wedge pattern in a sense because it validates that lower level.

    Once I see that happen, I can begin watching for a close below support or above resistance.

    Hope that helps.

    Reply
Percy says

Enter your comment…how much is the training

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Michele Penna says

ottimo seguo con attenzione
Grazie Justin

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Darius says

10 day morning: Oh, wow, during the night it fell big. Would be surprising if it closes above trendline. At the moment it tests even 112.

Now if it closes below trendline and tests it as new resistance, then our target is 112? Or 110.85, thats what I did not understand from the article.

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Haitham says

Haitham 0796550851

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