Price on the USDJPY has smashed up higher and burst through a key resistance area on the daily chart closing well higher. Price managed to push through this crucial level and most importantly after being tested at the sessions close it was sitting above the resistance and not back below.
We can learn a lot about where price can and cannot close. If price moved up and tested this resistance level, but was not able to close above, it would show that this resistance level was still valid and that until price can close through, price is not going to be able to move higher. Because we can clearly see price was able to close above, whilst price can stay above and hold this level it has every chance to make it’s next move higher.
Now price has broken above this resistance it may move higher into the near term resistance level. Traders could start looking to get long with this short term momentum to ride the next wave into these highs. This resistance that price has just broken out of could act as a really solid logical new support level should price move back lower in the coming days. If price does not move lower traders could look for continuation signals to get long with the current up-momentum.
USDJPY DAILY CHART | 7TH JULY 2013
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