USD/JPY: Break Of 112.0 Due Soon
Since our short trade on this pair last week explained to our members and shown on my Instagram account (@bd_fx) from the level of 114.50, we have now fallen 250 PIPs and hitting my target at the weekly support of 112.000!
On our journey to this level this pair has given multiple fantastic shorting opportunities along the way. As shown on my chart, had anyone missed the initial short entry from the top on this pair, once we broke back below the key monthly level of 114.000, we then came back to retest this level and rejected, showing signs of further downside and also creating a head and shoulders pattern. This right shoulder on the pattern that had just been formed created a new trend as price then headed south, breaking my long-term ascending trend line, confirming for us to expect even more downside.
Two days ago explained to members, the price had now found support at 113.20, which was my first target for our short trade. From here, I expected price to consolidate or make a slight pullback towards the new trendline, and should this be rejected, this would provide us with yet another opportunity's to place a short trade but if we should break above then this would indicate bulls coming back into the market and we would need to close our initial short trade. Price proceeded to test the trend line for a vital third touch, triggering another wave of short selling of just above 100 PIPs on this pair for the day.
Today we have seen some more selling pressure as we finally reached 112.00 but we are seeing this area of support holding for now. I expect some more consolidation on this pair around this area but as we are about to enter the US session, we might get some more volatility than we have seen so far today in the UK session. Though this is a key level, with the selling pressure of the previous week, I believe this pair can break the 112.000 barrier but we may need to be patient to achieve this. Of course given that we have reached an important level and have fallen 200 PIPs in the past week this pair may be due a breather and could pull back before a new leg down. Currently, we are seeing some small consolidation around 112.00 and rejections to the downside but to take any long trade seriously, I would need to see a push back with a solid close above 112.60.