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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.
As I type this, the USDJPY is breaking to highs not seen since August 2.
The pair is also in the process of breaking that 106.80 resistance area that we have been monitoring for several weeks now.
And despite a short-term downtrend that has been in place since April, I was never interested in selling USDJPY.
The reason is simple.
Notice the descending channel in the chart below.
The USDJPY has been testing this support area around 105.00 since the first half of August.
Selling at the bottom of a channel like this is ill-advised.
If buyers can clear 106.80 on a daily closing basis, I would expect to see the area begin to act as new support.
Remember that I use New York close charts so that each 24-hour session opens and closes at 5 pm EST.
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So, a “daily closing basis” refers to that 5 pm EST closing price.
As I’ve mentioned several times recently, the next key resistance for USDJPY is the channel ceiling up near 108.00.
What happens there could decide whether the market remains in this short-term downtrend or if a relief rally is in order.
But first, it’s imperative that USDJPY bulls take out 106.80.
Keep in mind that Friday’s non-farm payroll will likely be the deciding factor here.