Hello Forex Traders,
The Yen is at a crucial spot. The major top is right in front of price action and the key question is: “will the USDJPY break above that 103.70 top?”
The 103.70 level is also this year’s high and a monthly resistance spot. The last time price was this high almost dates back to 6 months ago: May 21st.
Nobody in fact knows the answer to that question, but we do have methods to monitor the answer. And whatever the answer will be, the accompanying price action should provide Forex traders with plenty of opportunity. The USDJPY has reached the classical bounce or break spot.
BOUNCE OR BREAK
Here is an analysis of both the break and bounce.
1) Break scenario – break of top to the upside:
The USDJPY has been trending upwards very nicely since the break of the consolidation / triangle (magenta lines). The only thing remaining for the USDJPY is a clear break of the major 103.70 top (red).
A good breakout above that level means that price has space to move up towards 110, 120, and even 125.
That could translate into a ton of awesome breakout trades, which would be something that our trading room will capitalize on because it focuses on with the trend breakout strategies.
2) Bounce scenario – lack of break or weak break of top:
A failure to break could lead to a retracement OR a reversal. In general though, the correction could bring price back towards the broken triangle, for instance. But in the most extreme case, it could even travel back down to the 50% Fib at 90.50 (green circle).
A break of the daily support at +/- 101.60 is important “line in the sand” (green). A break of the daily support (green) would mean that the bulls most likely have lost control – at least for the moment and until further notice.
Whether the Yen will continue its path weakening soon will of course also influence the other Yen crosses. The GBPJPY and EURJPY have already been in a trending mode with many breakouts to the upside. The AUDJPY and NZDJPY have not moved as much due to the downward pressure of the Aussie (AUD) and Kiwi (NZD).
The EURJPY is in fact ready for another potential breakout trade. Check out yesterday’s Double Trend Trap video of less than 5 minutes to check out the details of that setup. The EURJPY has been trending in a very neat trend channel and has had a decent pause within that trend. Those pauses are often good spots to become extra alert for with the trend continuation plays.
The GBPJPY, too, has a very neat uptrend channel. Price is right at the bottom of that channel (blue) and could be at a bouncing spot. Also this pullback could be a great way to enter the trend. Don’t forget that price needs to make higher highs but also higher lows in a sustainable uptrend. This could be one of those higher lows….
What do you think of the Yen? Do you see it breaking or bouncing? Let us know down below!
Winner’s Edge Trading, as seen on: