USDJPY tested an incredibly significant support today at 130.70.
I’ve written about this level several times, including the February 3rd bullish breakout.
Not only is 130.70 a key horizontal level, but it’s also the golden pocket of the recent rally.
The golden pocket includes the area between the 61.8% Fibonacci retracement and the 65% level.
Markets love to retest this region and often reverse from it.
However, the better option to take advantage of any strength from USDJPY after today’s retest is a potential reclaim of 132.60-132.90.
That’s the area USDJPY lost on Friday, and it’s also Monday’s high as of this writing.
So 132.90 is the level to reclaim on a daily closing basis for USDJPY to strengthen toward 134.40 and possibly 135.38.
Conversely, a daily close below 130.70 would indicate weakness and open up the 128.00 lows from January.
Remember to keep one eye on the US Dollar Index (DXY), too.
While most only associate the DXY as the inverse of EURUSD, it’s also incredibly correlated to the USDJPY.
Currently, the DXY is below its 103.50 yearly open, but a reclaim there keeps the level intact as support.
And if you saw the weekly forecast, you know about the significance of 102.60.
Lastly, we have a Fed rate decision and FOMC press conference this Wednesday at 2:30 pm EST, which will no doubt shake things up for USDJPY.
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