USDJPY has been a roller coaster in 2022.
We had a massive rally between March and October, followed by an equally impressive selloff.
But the most appealing aspect of this year’s price action is the symmetry that USDJPY has displayed.
The ascent between March and October carved a textbook ascending channel, which broke down in early November.
USDJPY has since formed a descending channel within the current pullback.
So the two channels above give us a broad outline to work with, but what about the day-to-day price action for USDJPY?
For that, we must plot some horizontal levels to determine the likely path forward.
Notice in the chart below how USDJPY recently tested the 138.25 confluence of resistance.
Well, we have another confluence of resistance that’s developed just above 134.
So in the short term, I’d say there’s a decent chance we see USDJPY trend sideways to higher toward that 134 region, potentially sometime next week.
What the pair does from there will have huge implications as we enter 2023.
A bearish rejection from there could extend the drop lower to 126.80.
Alternatively, a daily and weekly close above 134.20 would re-expose 138.25 and potentially higher in 2023.
But for now, we will likely see USDJPY churn sideways to higher toward 134 as long as 130.70 holds on a daily closing basis.