USDJPY to Resume Uptrend Following Breakout?

by Justin Bennett  · 

February 21, 2020

by Justin Bennett  · 

February 21, 2020

by Justin Bennett  · 

February 21, 2020

The USDJPY is on the move again.

After months of consolidating, the risk-sensitive pair ripped 250 pips higher this week.

Most of those gains occurred on Wednesday when the pair closed higher by 150 pips, clearing that May 6, 2019 gap at 111.10.

I wrote about this level several weeks ago.

It’s no coincidence that Thursday’s session carved a low of 111.11 before rocketing higher by another 100+ pips.

But instead of talking about trivial details, I want to take a step back today and look at the bigger picture.

I also have no interest in discussing why the Japanese yen did what it did.

The price action is all that matters. It’s the only thing that determines whether an event or outcome is positive or negative for a currency.

Everything else is just noise, in my opinion.

With that in mind, here’s what USDJPY did this past week:

USDJPY multi-year wedge pattern

That’s the monthly time frame, but this wedge has been holding up on a weekly closing basis as well.

Like it or not, the risk-sensitive pair is in the process of clearing the top of a wedge pattern that has been around since 2015.

Of course, we didn’t know this was a wedge until much later than that.

But unless this turns out to be a false break, this week’s rally is a significant moment for the USDJPY.

It could very well re-establish the uptrend we saw between 2012 and 2015.

Now, as for key levels to watch for next week, a lot of it will come down to today’s close.

As long as USDJPY can stay above 111.10, that’s the first key support for next week, in my opinion.

We could also see a retest of the wedge top as new support, but that would result in a much deeper retracement.

As for key resistance, this week’s high at 112.25 is one to watch, as well as 113.25 and the previous range top at 114.50.

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USDJPY key support and resistance on the daily time frame

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  1. Good idea on USDJPY, but please what is your thought on USDCHF doing the opposite?
    I saw this trend line, trace back from 2015.01.11 on the weekly chart and currently it serve as resistance. Thanks

    1. Hi Samuel. Sorry to budge mate. The smart money seems to be pushing the dollar high this quarter. For the year that could be a false move before we reverse and trend down. However if you consider that the longer picture is in a consolidation then you can expect the usdchf to rise until the higher boundary of the monthly chart channel. And remember it’s a new decade, so one needs to really consider the long term view in the markets as a decade is a significant period for investors(long term traders). And also do not forget that most of them are those who control price.

  2. Hi Justin! Thank you for sharing such wonderful insight on the dollaryen, especially the long term view. However I feel that what you share here with us is really incomplete therefore not tradable. I mean you don’t share entries and exits. Hence we never know your risk to reward ratios and we never know how u managed those trades.

      1. I have also looked carefully at the dollaryen long term view and I’m am of the opinion that it has been ranging between 106 and 115 since 2016. Seeing that the dollar is heading higher this quarter, it would not be surprising to see it touch 115 once again before mid April 2020.

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