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Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
The USDJPY has performed well for us lately.
Will it continue to do so?
Let’s discuss what needs to happen for USDJPY to climb even higher next week.
But first, let’s recap the last couple of weeks.
The September 5 break above 106.80 was something I discussed several times as a possibility given the higher lows in late August and early September.
USDJPY hit our 120-pip target at 108.00 on September 12.
Then came the close above channel resistance last week.
I discussed that in Sunday’s video.
More specifically, I was waiting to see how USDJPY would react to the level as new support.
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That brings us to the last 48 hours of price action.
Notice how Thursday’s session caught a bid at 107.78, and so far, Friday has carved a low at 107.76.
Those prices represent what used to be descending channel resistance, which is now serving as support.
But now the question is, can buyers keep this up, literally?
Or better yet, can USDJPY bulls force a retest of the 109.00 handle next week.
At the risk of sounding like a broken record, that’s anyone’s guess.
I don’t know where USDJPY is going, or any currency pair for that matter.
That said, as long as the 107.70 support area is holding on a daily closing basis, I have to respect the potential for a move higher.
As I mentioned above, the next key resistance level comes in at 109.00.
You can see how 109.00 served as support in mid-May before flipping to resistance in July and early August.
A close above 109.00 would expose 110.60 and perhaps even the open gap from May 3 at 111.10.
On the flip side, a daily close back inside this descending channel would be a sign of weakness.
It would negate the recent break above it, and re-open the door to 106.80.
Regardless of whether or not 107.70 support holds, I favor USDJPY over other currency pairs simply because it’s performing well technically.
I can’t say the same for some others that continue to chop sideways with no real conviction or technical backdrop.