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Dollar-Yen is facing an important resistance point.

USDJPY or the Dollar-Yen is encountering a key support and resistance point that has existed for nearly four years.  It’s hard to not forget when the implementation of Abenomics came into play and the Bank of Japan would go out of its way to weaken the Japanese Yen against all currencies.  Japan faces many economic challenges and one of the biggest challenges has been a nearly three decade long struggle with deflation.  A weaker Japanese Yen helps the Japanese economy with manufacturing and distribution.

The key resistance point is 107.824 and as seen below is a price that the price either breaks through or respects as a support point.  It is not as respected as a resistance point.

USDJPY Dollar Yen Resistance

Dollar-Yen at 107.824 started off as a weak resistance point that became a stronger support point

The price does not just test the 107.824 point or even come very close to it and drop in the face of it.  No, rather the market has far less respect for it as a resistance point.  Each time the price comes close to it on a weekly basis on an upswing, it crashes through it and uses it as a support to springboard it.

USDJPY Dollar Yen Resistance

The first time the price pushed through this price it was nearly a White Marubozu Candle (the extremely small difference between the High and Low of this Daily Candle makes it not technically a Marubozu).  The price would not revisit until a few weeks later when the price slowly went through the price as a support zone for the Dollar-Yen.  Notice how in the second highlighted portion of the image above that the price being discussed serves a division between the Close of the first candle and the Open of the second candle.  It broke through and went down only to re-emerge a few weeks later back toward the same price once again.  Once again, the price shattered through this price and this price level could give USDJPY the same sort of downward push that it would get going upward.  The price was tested for the three days and the inability to push downward resulted in bullish momentum, but with one last tease where the wick would come close to the 107.824 point.  Of course, the price would go up and not re-visit these levels again for nearly 1 1/2 years.

Dollar-Yen in Mid-2016 serves as the time when there was resistance

USDJPY Dollar Yen Chart

The patterns remained the same with wicks touching the 107.824 price and then springboarding upwards.  The price would crash through the 107.824 toward the downside only to surge back up the same way it always go through with a long white candle of some sort on a daily chart.  In June 2016, the price would crash down again through the price point and then two days later have a touch and go drop that was exacerbated by the volatility of the Brexit vote.

The only time that the price was respected was when the price teased that it would push through to test the price, but ultimately did not after an upward movement of 750 pips.  107.824 was not touched, it was merely teased.

November 2016 much had changed for the Dollar-Yen

USDJPY Dollar Yen Daily Chart

The election of Donald Trump as President surprised the markets, but eventually resulted in a bullish move for USDJPY.  Much like other bullish moves, the price smashed through 107.824 in fell swoop and then briefly tested the price on the next day with the price serving as a springboard.  It’s not much of a resistance point when it is actually touched.

2017 and 2018 Dollar-Yen (USDJPY)

USDJPY Chart 2017 and 2018 Dollar-Yen

107.824 served as a support price as the daily candle wick crossed through it, but not the close in September 2017.  This price would serve as a springboard once again and effectively creating a triple top by November 2017.  USDJPY would fall in December 2017 and through February 2018 when it would once again fall through 107.824 and it would not offer any support and then it would provide the resistance for a dead cat bounce and then the Dollar-Yen would hit lows unseen since before the 2016 U.S. Presidential Election.

So to break it all down with the Dollar-Yen at 107.824 in the past four years:

  • 4 Times the price would crash through this price on a long white candle.
  • 4 Times the price would be used as a springboard to push the price upward.
  • 3 Times the price would crash through this price on a long black candle.
  • 2 Times the price would touch and go through this price to go downwards.
  • 1 Time the price teased that it would touch this price, but did not reach it and went down.

What can be said about the Dollar-Yen as it nearly touched this price last Friday?

USDJPY came 5 pips shy of 107.824 once again and it remains to be seen if it will hold up as a resistance level.  History tells us that any sort of a bullish tease in price at this level results in the price going back the other way.   The bullish case is that the price consolidation may remove that downside possibility and the price may rise out of it and stay above 107.824 for a few weeks.  There are no strong bullish or bearish candles yet and the way to break through this price is a strong bullish candle.  If a strong bullish candle materializes and a springboard candle comes with it like in the past, it is a good time to buy and take 100-300 pips, at least when examining the history of the Dollar-Yen.

If you can get your algorithm to do pattern recognition, it would probably pick up on all this, if coded properly.

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