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Recall this long term USDJPY support resistance level at 103

The longer this multi-decade support resistance zone the stronger!

Recall this little lesson ‘Significant support resistance levels are stronger: USDJPY case study

Technical analysis works on probabilities but there are “rules” to follow. A particular rule says that the more significant a level is, the stronger it becomes.

  1. The more obvious a level is so that ‘I see it, you see it and many sees it’, the more followers it has.
  2. Levels on higher time frame are stronger than those on lower timeframe.
  3. The longer duration that the level holds, the stronger it is.
  4. The more times the level has been tested or validated (by price encountering the support resistance and turning away), the more meaningful it is.
  5. Traders should assume that a level will hold until it is broken.
  6. When a significant level breaks, the outcome is a bigger move.

As we can see from price action after USDJPY encountered the 103 level back in May, directly or indirectly “Rules” #1 – 5 above were complied with. As a result, the pair spent the following 5 months in consolidation.

USDJPY support resistance level

103 is a fib retracement level; traders should encounter a zone than a discrete level

 

What should one expect from price action this time?

From the daily chart we can see that the 5-month consolidation was a symmetrical triangle chart pattern followed by a logical breakout in line with the previous upwards momentum. The most likely scenario therefore to expect is a retest of 103. Rules #5 and 6 to apply.

breakout

Retest 103; apply Rules #5 and #6

Traders should assume that a level will hold until it is broken.

If broken?

When a significant level breaks, the outcome is a bigger move.

Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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One thought on “Recall this long term USDJPY support resistance level at 103”

  1. Helmy Hamzar says:

    thanks for sharing the rules! At times, I violated some of these so constant remainder works

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