FX.co ★ USD/JPY outlook November 4, 2020

USD/JPY may soon break 10400

There is still a lot that can happen with the US election before we have a clear winner. From a technical perspective, the USD/JPY pair has been showing some resilience near the 104.00 level and could pick a clearer trajectory after the announcement of the election results.

The descending wedge that has been forming since last July signals that we might eventually see a dip that could lead to a test of the low and psychological level of 102 and also the lower support Descending Bearish Channel. At this time given the general trend and descending nature of the wedge before going with an aggressively bearish bias, we first need to see a confirmed break of support at the 104.00 psychological level.

On the flip-side, if USD/JPY continues to hold 104.00 and bounce off, we could see the narrowing upper trend line range as immediate resistance. A top-side break of the upper trend-line would have the June high in play around 109.6.

All-in-all, the quieting price action of USD/JPY over the past few months suggests an upcoming impulsive move. But traders need to wait for confirmation of a breakout before running with a trend bias. Price could always continue to range sideways for a while before providing clarity.