The USDJPY has been confined in a trading triangle. Yesterday the price moved higher and wandered toward the topside trend line (see post: Forex technical trading: USDJPY a little more bullish but still within the range parameters ). A break above would open up the topside again. Regular reader, Chase, warned in the comments section, that traders should be cautious for a failed break of the trend line. There indeed was additional overhead resistance. The pair did break above the trend line but could not extend above the next resistance area (at 118.75-85) and the break indeed failed and reversed.
USDJPY has now broken below the lower trend line. Can the momentum continue.?
The current price is now moving below the lower trend line at the 117.57 level (see chart above). Like the upside, there is the next hurdle at the 117.17-238 level to get and stay below. Risk can be the underside of the broken trend line at 117.57, or at the 117.738 area where the 200 hour MA (green line and 38.2% of the move down from the December 23rd high). The price should not move above that level – if we are finally going to get a break away from this consolidation area. Moving below the 117.17 will have traders thinking about the lows for the month. Stocks are expected to open down as much as 300 points. That is scary and supportive of the JPY. However, it also does tend to get traders focused on the wiggles and waggles in the stock market (and perhaps the stock traders paying attention to the USDJPY as well ; ) ). So any 50 point rally in the Dow by the dip buyers can be exaggerated.
