USDJPY: Why Last Week’s Low Might Not Hold

by Justin Bennett  · 

December 13, 2023

by Justin Bennett  · 

December 13, 2023

by Justin Bennett  · 

December 13, 2023

Today I’m going to share some key levels on USDJPY, including what we could get from today’s Fed rate decision and statement.

I’ll also discuss why last week’s capitulation low might not hold.

Watch the video below and scroll down for the annotated charts and analysis.

USDJPY is trading sideways ahead of today’s Fed rate decision and statement, which is to be expected, especially after last week’s capitulation.

A market will often trade within the range of a large capitulation candle like last Thursday’s for some time before a new trend develops.

You may recall one of my recent USDJPY videos where we discussed the potential for yen strength based on the yen futures 2022 low.

That certainly played out with last week’s 570-pip capitulation from pairs like USDJPY.

Now, let’s discuss some levels to watch this week.

First, we have the 142.20 pivot from late 2022 that was swept last week and helped catalyze the recovery effort.

Next, we have the 144.80 level that was reclaimed on Friday and allowed USDJPY to retest 146.56 this week.

And let’s not forget the 2023 ascending channel that broke down last week as well.

Be sure to watch the video above for all the details.

For now, USDJPY is locked between 144.80 support and 146.56 resistance ahead of today’s volatility-inducing FOMC.

As mentioned in recent DXY and EURUSD videos, a sweep of either support or resistance (or both) is typical on FOMC days.

It’s also ill-advised to look for opportunities prior to the FOMC volatility, as you’re likely to get stopped out before any meaningful trend develops.

That said, I’m not convinced USDJPY has bottomed.

The pair has yet to test its October 2022 trend line near 139.50, an area that lines up with the yen futures chart I discuss in today’s video.

Of course, there’s no guarantee USDJPY tests that level, but multi-year trend lines tend to serve as magnets, especially the significance of the yen futures trend line from 2021.

So, for now, I’ll be watching for a sweep of the 146.56 resistance level for a possible short, or a sustained break back below 144.80.

Alternatively, a reclaim of 146.56 and the ascending channel bottom from March would be bullish for USDJPY.

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