USD / JPY Penetrating upward break from a downward sloping channel

USD / JPY price, news and analysis:

  • USD / JPY has been steadily declining for nearly a year and is trading within a downward-sloping channel on the charts.
  • However, now it scans the channel resistance line and if it does a sustained break above it, more gains are likely to come.

USD / JPY is trying to break higher

USD / JPY traces the resistance line of a downward-sloping channel on the charts that has featured price action since early last year. If it breaks and stays above that line, further gains are likely to follow.

USD / JPY price chart, daily time frame (March 16, 2020 – January 27, 2021)

Latest USD / JPY price chart

Source: Finance Prop (You can click on it for a larger image)

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Looking at this in more detail, the chart below shows the most recent action. At the time of writing, the resistance line is checking in at 104.02 and the exchange rate is 104.09, so this can hardly be called an upside break. However, if the price continues to rise, the highs of 105.68 on Nov. 11, 106.11 on Oct. 7, and 107.05 on Aug. 13 would be reasonable targets.

USD / JPY price chart, daily time frame (Aug 17, 2020 – Jan 27, 2021)

Latest USD / JPY price chart (2)

Source: Finance Prop (You can click on it for a larger image)

If the price does not break through convincingly and falls back, there is a risk that it could fall all the way to the low of 102.59 that was reached on January 6. It’s also worth noting that the 14-day RSI at the bottom of the chart above failed to break above the 60 level for a while, also warning that an upside break would be difficult.

Therefore, traders may want to wait a few days to make sure a break higher is held before taking bullish positions.

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— Written by Martin Essex, Analyst

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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