USDJPY bounces off key resistance

USDJPY has been in a downtrend since the second half of October but in the middle of November, it entered a very technical channel down formation (black). The price is making lower lows and highs and the lines connecting them are parallel – a real technical beauty.

Most recently, USDJPY tested the upper line of this channel-down formation, which is the most important dynamic resistance here. In addition, we tested the horizontal resistance on the 131 that has been playing an important role in this instrument since April of last year. Bounces off those areas are very bearish and open up a way towards new, long-term lows.

On the other hand, price breaking the two resistances would be very bullish and give us a buy signal with a target of 138. Chances of that happening are rather low at the moment, with the bearish scenario being the dominant now.