Last week I wrote about an ascending channel that has developed on the USDJPY chart for the last few months.
Channel support intersected with the 130.70 key horizontal this week, where the pair is catching a bid so far.
I mentioned to Daily Price Action members in Discord that the risk to reward favored bulls when USDJPY was trading at 130.93 on Wednesday.
Since then, we’ve seen a decent bounce as the pair tried to carve a higher low.
This latest retest of 130.70 looks similar to the price action in late January.
That doesn’t mean it will play out the same, but USDJPY looks relatively bullish while above 130.70 on a daily closing basis.
However, bulls still need to reclaim the 132.90 level I wrote about last week.
You can see how USDJPY failed to close a day above that mark, which triggered the current pullback.
So although I’m cautiously bullish on USDJPY above 130.70, a daily close above 132.90 would trigger the next move toward 134.40 and higher.
Alternatively, a daily close below 130.70 would negate the bullish outlook and expose 128.00.
If this bullish channel completes, we could see USDJPY extend toward the golden pocket of the October 2022 to January 2023 correction.
That equals a gain of 1,000 pips from current levels, but bulls have their work cut out to make that happen.
