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The USDJPY bounced from an area I mentioned last week.
The area between 104.20 and 104.60 has served as key support for several years.
As I’m sure you noticed, the USDJPY local bottom occurred just below 104.20 before the pair bounced 140 pips.
However, USDJPY is still holding below a multi-year level on a monthly closing basis.
This is the most important chart, in my opinion.
As long as the pair is below 106.50 on a monthly closing basis, the USDJPY is at risk of further losses.
The question then becomes, how should you time your entries?
While the exact method is your choice, I would keep a close eye on the 106.00 region along with 104.20.
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The latter is the area sellers have to clear on a daily closing basis.
The 106.00 region is new resistance based on the March trend line.
I mentioned the placement of this trend line to members on September 16th.
Notice how it cuts off the July 31st lower wick but connects with the lows from late August and mid-September.
There’s no guarantee USDJPY will make it back to 106.00, but this is the highest placement for the March trend line.
Regardless, I continue to like the idea of looking for selling opportunities that develop below 106.50.
And if USDJPY does rotate lower over the coming days, keep an eye out for a break below the 104.20 to 104.60 area for a move to 101.00.