Although I include USDJPY charts in practically every daily post, it’s been a while since I dedicated an entire post to its latest meanderings. In our November 27, 2016 update, with USDJPY at 112.62, we were looking for it to backtest a recently topped channel midline and continue higher to tag 115.58 or 120.11.
As it turned out, the pair was so focused on assisting SPX to a positive end-of-the-year print that the backtest never really happened. In fact, when the rising purple channel finally broke “down” it resulted in a 5% rally, albeit at a slower pace.
USDJPY pushed past 115, but never could make to to 120.11, falling 1.2% short. I puzzled over its failure to seal the deal, then pretty much forgot about it after USDJPY broke down and started tagging our downside targets.
Now, another 7.2% to the good, I’ve discovered that it actually made perfect sense for USDJPY to reverse where it did. In fact, it appears to offer great clues as to what comes next.
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