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I wrote about the USDJPY on Wednesday.
The key takeaway from that post was the consolidation following some massive moves over the last five weeks.
I shared with members my short entry at 111.50 in the forums, and I said the same thing in yesterday’s members-only USDJPY video.
If you aren’t a Daily Price Action member, you may be wondering what prompted me to get short.
For that, we have to turn to the price action since March 20th.
On the daily time frame, the movement between the 20th and today looks like harmless consolidation.
Though I would argue that the long lower wicks of recent candles at a swing high signaled weakness.
However, take a look at the intraday charts.
Here’s the 4-hour time frame:
Notice the intraday rising wedge above.
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As I explained to members on Wednesday, that structure signaled exhaustion from USDJPY buyers.
The pair was still trading at 111.20 when I made that statement.
Fast forward to today, and we can see that USDJPY is now testing the next key support at 109.50.
That’s the top of the multi-year wedge that extends from the 2015 high.
Some traders may be looking to buy USDJPY here, but I think that’s a mistake.
I could be wrong. However, the aggressiveness of this latest rotation lower signals continued weakness.
That said, it’s imperative to see a daily close below that 109.50 support area first.
Until that time, 109.50 is support.
A daily close below 109.50 would open the door to 108.50 and perhaps 106.80.