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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.
USDJPY buyers are being tested today.
In Sunday’s video, I mentioned that the direction for this week would come down to whether or not buyers could hang on to that 108.00 area as support.
That’s the top of a descending channel that began in April.
As you can see, the USDJPY closed above channel resistance on Thursday of last week.
It then retested the channel top as new support on Friday.
We went into the weekend with USDJPY above new support at 107.90, but it was a marginal break.
As such, I wanted to see how buyers would react early this week.
But this week’s 60-pip gap down is forcing buyers to recover last week’s breakout.
However, despite gapping down, USDJPY bulls have nearly clawed back all 60 of those pips.
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That doesn’t mean they are home free yet, though.
We still have several hours before today’s close, so anything can happen.
Remember that I use New York close charts, which gives me five 24-hour sessions each week.
Trading with anything other than New York close charts exposes you to false signals.
If we do see buyers close the pair back above that 108.00 area, I will continue to favor buying USDJPY.
As for resistance levels to mark on your chart, I think 109.00 followed by 110.60 are two must-watch levels on the way up.
I pointed out both of those in Sunday’s video.
On the other hand, a daily close back inside this channel would be a bearish sign for the pair.
It could also expose 106.80 support, which is where this market broke out from earlier this month.