Last week’s USD/JPY quotes reached the key resistance area, where a horizontal level of 110.00 coincides with the EMA 10/20 average channel. Let’s take a look at the charts from a Price Action perspective.
As you can see in the day chart below, the dollar to yen exchange rate stagnated in Wednesday’s session, leading to the formation of an inside bar. During today’s session, sellers are already trying to leave the consolidation range, as the mother’s candle low is being tested.
If a bottom breaking from the inside bar is successful (closing the day under the mother’s candle minima), the potential for a return to declines will increase. The key support in such a scenario can be found around 107.50. However, it is also worth observing the level of 109.00, which may stop the possible falls.
Alternatively, an increase in the direction of 111.40 may be expected after the effective breakout of resistance at 110.00. However, it should be remembered that the momentum has recently been on the side of sellers.
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