The USDJPY is hovering above a critical support level ahead of the US elections this week.
I’ve discussed the significance of the 104.20 support area a few times in recent weeks.
We also caught the recent breakdown from a small rising wedge on October 12th with a target of 104.20.
That 150 pip target was reached 12 days later.
So where to from here?
As long as the 106.50 area is serving as resistance on a monthly closing basis, I like USDJPY lower.
Notice how July was the first month to close beyond the symmetrical triangle.
Furthermore, USDJPY continues to carve lower highs.
This has been a pattern since February.
A series of lower highs into a critical support area like 104.20 usually suggests an imminent break lower.
But as I’ve stated recently, it’s going to take a daily close below 104.20 to expose the 101.00 region.
Alternatively, if USDJPY takes out the recent high near 106.00, it would indicate a turn higher for the pair.
Either way, I won’t be doing anything here until the dust settles following the November 3rd US elections.
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