USDJPY to Remain Indecisive Between 108.50 and 109.50

by Justin Bennett  · 

November 6, 2019

by Justin Bennett  · 

November 6, 2019

by Justin Bennett  · 

November 6, 2019

The USDJPY closed above the 109.00 handle on Tuesday.

It’s a key level I’ve discussed several times since the pair was bouncing from 106.80 support in early October.

However, I have some concerns about the current rally.

The first is what just occurred on the weekly time frame.

USDJPY bearish engulfing week

Notice how the USDJPY price action last week engulfed the range of the previous one.

It wasn’t the most bearish close, but it still qualifies as a potentially bearish signal, in my opinion.

Tuesday’s session came close to taking out the high of that weekly candle but fell short by four pips.

You may think the weekly candle above is enough to short the USDJPY.

I would have to disagree.

A candlestick pattern alone is meaningless without considering other technical factors, especially those that could foil your plan.

More on that in a moment.

The second issue I have with the current rally is a pattern that has developed on the daily time frame.

I pointed this out last week, but the rising wedge that extends from the year-to-date low in August hints at exhaustion from buyers.

However, it’s going to take a daily close below 108.50 to confirm the pattern.

Such a close would open the door to the 106.80 key level with a break there exposing the 105.00 region.

Just keep in mind that there are no guarantees.

The weekly and daily patterns I just discussed are meaningless if the market doesn’t respect them.

This game is about listening to the market, not trying to outsmart it.

With that in mind, I’m not interested in selling the USDJPY until the pair closes below wedge support near 108.50.

I’m also not interested in buying the pair until we see a close above the wedge top near 109.50 followed by constructive price action.

I dislike the idea of buying bullish breakouts of ascending levels due to their tendency to become bull traps.

That means I would need to see more from buyers in the event of a topside break.

All in all, though, the USDJPY is one for the watchlist until we see a break below the 108.50 area or above the 109.50 region.

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USDJPY potential rising wedge pattern

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  1. WEEKLY TF: – (Bullish) Macd has gone flat to rising and RSI pointing up with more in the tank for upward action i.e not overbought. However Ma 14 is rising to converge toward cross over on the Ma50. Trend lines show we are moving in a sideways wedge since June 2016 with price action biased toward moving up to the top trend line at (10.403). (Bearish) double top on the stochastics, MAs are going sideways since 16/10/19. Summary, I see near term more sideways action with a slight fall based on stochastics then a test of the (108.3) support off lower weekly trend line. DAILY TF:- (Bullish) Price has moved through 200 MA and Macd is in positive territory. Stochastics are still moving up. (Bearish) RSI is turning over today (but not yet overbought). OUTCOME: Indecisiveness as we have so much conflicting indicators and MA sideway action precipitates this. Look to trade on the 4HR TF for better entry on an oversold stochastic condition (potentially tomorrow) around the (108.7) and tight stop to spec it up to the 110.4 level.

    1. seems complicated from what I can surmise from your dialogue.
      I will stick with what coach Justin mentioned much easier to understand and digest.

  2. Hey Justin, great analysis as always. Sellers should ideally wait for price to breach the trend line just below 108.50 for confirmation of bearish bias. Thoughts? ….and my first post done 🙂

  3. was waitng for 109.36 breach intraday .. can see its importance as last few times stopped at 109.25 area. difficult to say how low it can go .. mayb 108.x but overall looks like 112.x more likely now .. goes in line with overall risk trends and us 10y rates. patience is key!

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