USDJPY: Keep This 470-Pip Wedge on Your Radar

Just when it looked like USDJPY would break down on Monday, buyers came to the rescue.

I first pointed out this wedge pattern on December 2nd. We discussed it again on the 6th ahead of non-farm payroll.

The USDJPY was testing support at 112.40 when I released that commentary on the 6th.

As you can see, support held then and did so again yesterday.

The pair did break the 112.40 area on an intraday basis. But remember, we’re looking for a daily close below support or above resistance.

A New York close (5 pm EST) chart is essential for trading price action. Anything else can present false signals.

Go here to get instant access to the same charts I use for trading price action.

This is exactly what you want to see if you’re waiting for a break.

The longer a market consolidates, the more explosive the resulting breakout is likely to be.

Furthermore, it frees up more space for buyers or sellers.

If USDJPY had broken wedge support last Friday, we would only have about 60 pips to the first support level at 111.70.

However, given where the pair is trading now, we would have closer to 90 or even 100 pips between wedge support and 111.70.

The same goes for a break higher.

The longer USDJPY consolidates, the greater the distance between wedge resistance and the 114.50 horizontal level.

Be sure to review Thursday’s commentary for additional levels.

But 111.70 and 114.50 are just the immediate targets following a breakout.

If we use conventional methods to determine an objective for this wedge, we come up with much more lofty targets.

Given the 470 pip height of the pattern (August 21 low to October 3 high), the target for a break higher is somewhere around 118.60.

That’s 470 pips higher from the top of this wedge.

And a break lower could target the 108.00 handle. As you probably guessed, that’s 470 pips lower from the bottom of the wedge.

Once you mark those levels on your chart (108.00 and 118.60), you’ll notice how significant they are.

The 108.00 handle has served as support since April of last year.

And 118.60 was the December 2016 high as well as the 2017 high.

The way both objectives line up with key levels could be a mere coincidence, or it could be something more.

Either way, a daily close below wedge support or above resistance would be a significant development for USDJPY.

I won’t try to guess which way this will break. I’d rather sit back and wait for the market to make the first move.

If the objectives in the chart below are any indication, there’s no rush here. 

The market should have plenty of room to run following a breakout.

[thrive_custom_box title=”” style=”dark” type=”color” color=”#fef5c4″ border=”fadf98″]

Save 40% on a Lifetime Membership to Daily Price Action – Ends December 31st!

Click Here to start profiting with Justin.

[/thrive_custom_box]