As I write this, USDJPY bulls are challenging a key resistance level. The trend line that extends from the current 2017 high at 118.60 is no doubt playing a role today just as it did last week.
The trend line begins at the January 3rd high. The second point is the July 11th high at 114.49.
Here’s how the bigger picture looks at the moment:
You may remember from the last commentary that the horizontal level at 113.15 is also a key resistance area. The pair tested this area Wednesday and Thursday of last week.
This means that the area between 112.70 and 113.15 is actually a confluence of resistance. It includes both the 2017 trend line (above) and the 113.15 handle.
Where the USDJPY goes from here is anyone’s guess. But chances are we’ll have an answer one way or the other by Friday’s close.
Janet Yellen speaks on Wednesday at 3:15 pm EST and non-farm payroll is this Friday at 8:30 am EST. Both events could spark a move, particularly Friday’s payroll figures.
From a technical standpoint, I’m only concerned with where each session closes at 5 pm EST. Trading anything else would open the door to false breaks. Look no further than last week’s failed intraday breakouts above trend line resistance.
It’s going to take a daily close (5 pm EST) above 113.15 resistance to extend the current rally. Such a break would expose the next resistance level at 114.35 and perhaps the January to March highs near 115.40.
Alternatively, a daily close below 111.60 would be a major setback for bulls. It would also pave the way for a move toward the August highs at 110.90 and perhaps the short-term pivot near 109.85.
The daily close in concert with the levels I just mentioned will tell the story. Everything else is just noise as far as I’m concerned.
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