A few days ago I commented on a potential USDJPY rising wedge.
It was an early stage pattern without much structure, so there was a good chance it would need to be modified.
That’s what we’re seeing so far this week. The pair has broken above the 110.00 area and is fast approaching a key resistance zone between 111.40 and 111.70.
USDJPY has seen a lot of reversals from this area since early 2016.
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However, there are no guarantees sellers will be able to defend 111.40/70 if tested over the coming sessions.
A study of the price action since mid-2017 shows a range bound market.
So despite the aggressive 700 pip breakdown that occurred in December, there is little to no longer-term momentum here.
That range extends as high as 114.50 and as low as the year-to-date low at 105.60.
That’s a lot of chart to analyze, but it’s important to keep the range in mind in case you’re thinking of selling USDJPY sometime soon.
For now, a retest of the 111.40/70 resistance area followed by bearish price action such as a pin bar could push the pair back to 110.00 support.
Alternatively, a daily close above 111.70 would extend the current rally.
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