Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
USDJPY is testing a key resistance level today.
I’ve written about the 108.70 area several times recently. You can see where it served as a pivot in January and early February.
You will also notice how 108.70 capped the June advance which I wrote about on June 12th.
However, I’m not interested in selling USDJPY.
The bounce that occurred in late June from the 106.80 area was far too aggressive to ignore.
Furthermore, USDJPY has carved what appears to be a higher low just last week.
That higher low was actually a retest of the broken trend line that extends from the year-to-date high.
At least that’s my interpretation of what’s happening here.
If buyers can clear 108.70 on a daily closing basis, there isn’t much to prevent a run at the next key resistance at 109.70.
The pair may need to consolidate before that can occur, however.
With that in mind, I’m going to wait until USDJPY closes the day above 108.70 before I entertain a long position here.
If, on the other hand, we get some bearish price action from 108.70 such as a pin bar, we could see USDJPY unravel a bit toward the 108.15 area.