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USDJPY Teeters on Key Support Ahead of NFP

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On Sunday I pointed out a possible wedge pattern on USDJPY.

The upper level extends from the year-to-date high near 114.50. It came under pressure on November 28th, but sellers held their ground.

The lower level begins with the August low at 109.77. It connects with the October low at 111.37.

However, wedge support is a little more questionable than resistance.

We saw resistance cap the November 28th advance, but we have yet to see how this support level will hold up.

It may not take long to find out though.

Today’s session is testing support as I type this. And so far, I am starting to see a few bids crop up near 112.40.

That said, I’m by no means bullish USDJPY.

In fact, based on what we’ve seen from other yen pairs including CADJPY, I’ll go out on a limb and say that a break lower is the more likely outcome here.

A weaker U.S. dollar would also compliment the potential EURUSD bullish reversal pattern I wrote about on Monday.

As for USDJPY, a daily close below the 112.40 support area would expose downside targets including 111.70 and 110.70.

If you aren’t using New York close charts, you’re exposing yourself to false signals when trading price action.

Go here to get access to the same charts I use.

Alternatively, bullish price action from this 112.40 area could trigger a move back to resistance near 113.80.

Keep in mind that non-farm payroll (NFP) is on tap this Friday at its usual time of 8:30 am EST.

That will likely trigger an increase in volatility.

I will say, however, that NFP isn’t the market mover it used to be. That doesn’t mean it won’t shake things up though.

In summary, I’m staying relatively neutral here, but I am leaning toward a bearish outcome.

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USDJPY wedge pattern in uptrend

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17 comments
Chris says

Thanks Justin. Your comments are affirming my bearish sentiments. I entered short at 113.02 as a result

Reply
    Justin Bennett says

    You’re welcome.

    Reply
Alex says

Thank you for the information, it really helps.

Reply
    Justin Bennett says

    It’s my pleasure.

    Reply
Sulaiman says

Justin good you 3 much I go short on my demo yesterday and today all went in profit you 3 couch

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purity says

I am really greatful….you are awesome..

Reply
    Justin Bennett says

    I appreciate the support and kind words.

    Reply
bill1985 says

usd/chf looks like its breaking key area looking forward to seeing it in the daily set up’s :))

Reply
Pierre Mifsud says

This potential falling wedge that you are mentioning becomes much clearer on the weekly time frame

Reply
    Pierre Mifsud says

    Sorry what I said above is for EURUSD

    Reply
Pierre Mifsud says

You make a lot of sense….because the falling wedge on the weekly for EURUSD shows potential soaring of this pair maybe by 1100 pips to the 1.2480 handle…..but this is only an indication……how do you see all this…..

Reply
    Justin Bennett says

    We’ll see. My thoughts are in the post above.

    Reply
Anesu says

Thanks Justin

Reply
    Justin Bennett says

    You’re welcome.

    Reply
James tendai Chakapu says

Looking to go long since its 80% long bias

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