Will USD/JPY Finally Break Free?
Coming into the year, USD/JPY was on my radar as a breakout candidate after several years of narrowing price action. And, it still is. The price action in Q1 was some of the best we’ve seen in some time, but still leaves USD/JPY in the confines of its narrowing range.
With the upper threshold of the wedging pattern currently undergoing a test, we could find ourselves with a resolution in Q2. Either the first three month surge will continue and potentially lead to an outsized rally; or very soon, we will see USD/JPY make its way lower in-line with the same contracting sequence that’s played out in recent years
In the event USD/JPY can get above 110, a rally may commence towards the 2015 high set over 125.00. It’s quite a distance from here and won’t happen in a straight line, but a strong trading bias could be cemented. If the range continues, then taking short-term clips out of USD/JPY in both directions may be the name of the game until we see a definitive breakout in either direction.
USD/JPY Weekly Charts – Wedge Break May Be Nearing
Chart prepared by Paul Robinson, created with TradingView