USDJPY is sitting on a must-hold level for buyers.
I mentioned this trend line on January 11th.
It extends from the November 2018 high and connects with the April 2019 high as well as several highs last December.
Despite breaking above this resistance area on January 13th, the USDJPY went nowhere fast.
The lack of conviction was apparent given the paltry daily ranges and sideways movement that began on the 14th.
Then came the selloff on the 21st.
It was at this time that I mentioned to Daily Price Action members that a close back below this trend line would signal weakness.
Sure enough, the trend line came under pressure on Thursday.
However, as of this writing, the level is still holding as support.
Only a daily close below this trend line, currently near 109.30, would convert it to new resistance.
The “daily close” refers to the 5 pm EST close when using New York close Forex charts. Go here to get access to the same charts I use.
But given the short-term ascending channel in the chart below, a move lower does seem likely.
In fact, that channel could present a more appealing opportunity in the days ahead.
It would take a daily close below channel support, which is currently just below the key horizontal level at 108.40.
So, even if you miss a trade from this 109.30 region, you may be given a second-chance opportunity following a rotation just below 108.40.
Key resistance after Thursday’s close comes in at 109.70.
That’s the location of several highs from last December.
To summarize, further losses for the USDJPY seem likely, especially if the pair can close below this trend line as well as channel support just below 108.40.
That’s because the USDJPY tends to serve as a barometer for risk appetite.
When it falls, it often drags the yen crosses with it.