On December 30th, I wrote that the future direction for USDJPY hinges on 108.40.
Notice how the pair has caught a bid here since mid-November.
I also pointed out the price structure of the pair in the December 30th members-only video, namely the recent swing highs and lows.
The way the USDJPY was struggling to carve higher highs hinted at a possible pullback.
Furthermore, the pair had recently tested the trend line that extends from the November 2018 high.
I discussed this trend line in the December 21st forecast video.
All of this pointed to the potential for a pullback.
But the 108.40 support level stood in the way of a deeper correction.
While we still need a daily close below 108.40 to confirm the breakdown, the USDJPY looks ready to retest 106.80 in the coming days.
Remember that the “daily close” for me refers to 5 pm EST.
Go here to get access to the same New York close charts I use. These charts will give you five 24-hour sessions each week.
Notice too how the pair bounced from this 108.40 area on Thursday.
That’s a clear sign that the market is paying attention to this level, and that a daily close below it would be significant.
Just remember that there are no guarantees.
Although a daily close below 108.40 would signal weakness and also expose 106.80, it doesn’t mean it will happen.
There’s always a chance it could be a false break.
But for now, I’ll treat this first lower low since August 2019 and pending close below 108.40 as signs of a bearish reversal.
Key support levels on the way down include 106.80 followed by 105.00.
Alternatively, a daily close back above 108.40 would negate the bearish outlook and re-expose the November 2018 trend line near 109.50.
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