Daily Price Action
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USDJPY: Keep This 470-Pip Wedge on Your Radar

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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.

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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.

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USDJPY wedge pattern on daily time frame

Leave a Comment:

35 comments
Zill says

It should go bullish 470 pips

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    Justin Bennett says

    The market always has the final say.

    Reply
smarts says

Excerpt for the 470 pip move either direction thats exactly how my chart looks like. waiting for a break either way. until then sit do nothing and let market do its own thing. Thanks Justin, am learning from the best.

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    Jackson says

    hi,please can you alert me when the move concerned pleasee

    Reply
      Jackson says

      confirmed not concerned (correction for previous text)

      Reply
        Jenerali says

        look how the market would react on the given wedge levels of support and resistance, then go to the lower time frame for a reversal or continuation pattern

        Reply
      joel says

      We look out for a daily close above or below the trendline and we make a decision from there.

      Reply
      Justin Bennett says

      You’re more than welcome to sign up for email alerts.

      Reply
    Justin Bennett says

    You’re welcome. Cheers.

    Reply
Vuyo says

Thank you for the excellent analysis, it make sense and yes lets wait for the market to make its move and confirm it.

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    Justin Bennett says

    You’re welcome.

    Reply
Isiyaku Ibrahim says

Thanks Sir, we are very glad to hear from you

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    Justin Bennett says

    It’s my pleasure.

    Reply
Fred K says

The wedge you are referring to – is that an ascending wedge? If so wouldn’t the odds be greater for a break above rather than below?

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    Pierre Mifsud says

    Because it looks more as a symmetrical triangle so it can break either way. The only difference is that my measured height is straight not slanting and is 300 pips

    Reply
      Pierre Mifsud says

      I think it should break up as the DXY should reach 99.13 minimum

      Reply
    Justin Bennett says

    The market will decide as always.

    Reply
Kenny Jay says

Fuhhh !!! Nice pairs again . Same you give EURNZD and EURCAD with good profit .

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Oladimeji says

You have just nailed it again sir,thank you for the advise i will surely wait for either breakout, since I joined this platform I have got more confidence trading FX keep doing the good job sir God bless you.

Reply
    Justin Bennett says

    That’s great to hear. Thanks for stopping by.

    Reply
kingsbulu says

Sir,
USDJPY close below support level yesterday

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    Justin Bennett says

    Not according to my chart.

    Reply
ABRAHAM Gbenga says

Good info from you and awaken call. Thanks alot

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Sulaiman says

Sir Justin so who ever go long start from morning reach evening on this pairs so it’s 470 right

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MAJID Ali says

I believed bearish bears are inter the market

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Uzoma Nnamdi says

Thank you sir

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    Justin Bennett says

    You’re welcome.

    Reply
Sulaiman says

I doubt it

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Sulaiman says

Justin what is the difference between the pin bar and doji and gravestone doji. dragonfly doji.long-legging doji

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Jamie says

I believe it will be a short as if you look at last year price action around the same time as Christmas, youll notice is the EXACT same pattern which led to a fall in price of the dollar.
Cheers for your post by the way Justin 😀

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Zazuka ftt says

I personally believed the bear is knocking the door now..hihi

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Jenerali says

i anticipate a bearish move because of the existence of a multi year trend-line resistance confluence at 114.50

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Stephen says

Thank you, Mr Justin. Your analysis are always interesting.

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