Last week, I wrote about a critical trend line on USDJPY.
I also provided an update in last weekend’s forecast video.
The idea was simple – look for a short opportunity following a daily close below the trend line for a move to 104.20.
But before we get to that, it’s important to remember where the USDJPY is in the broader picture.
Notice that USDJPY closed below a multi-year support level in July.
That was the first monthly close beyond the wedge/triangle pattern.
The daily time frame, on the other hand, produced a small rising wedge, which I pointed out last week.
Monday’s session closed below the short-term support, which meant any retest of the 105.60 area should attract sellers.
And indeed it did.
So far, USDJPY has lost about 40 pips since retesting 105.60 as new resistance.
But sellers have a long way to go if they intend to test 104.20 support again.
Notice how 104.20 has served as key support since July 31st.
That’s the level that needs to break to open the door to my target of 101.00.
Given the lower highs since February and Monday’s close below the 105.60 area, it seems a retest of 104.20 and eventually, 101.00 are only a matter of time.