In the last few hours, the USDJPY pair traded below its December 3 low of 108.35, as the Japanese Yen gained against most of its peers.
It looked like the price was about to end the uptrend of the last few months but as the European trading session is coming to an end the price is back into the 108.35 to 109.72 price range.
Today’s selloff will make the pair interesting in the next few days, because if the price indeed manages to establish itself below the December 3 low of 108.35, then it might open the door for further declines.
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In late August, the USDJPY pair bottomed out from the 104.43 level, and over the next few months, it created higher and higher lows.
However, as we reached November the USDJPY struggled to maintain its gains, and in late November, the USDJPY spent a few days around the 108.35 level until the price reached a high of 109.72 in early December, yet a few days later the price revisited the 108.35 level and formed the December 3 low.
As the late November low and early December lows were more or less at the same level, it can be considered to have been a double bottom, and if we take the November and December highs into account then price might be trapped in a double bottom/rectangle pattern.
The height of the pattern is approximately 135 pips, and a break to the December 3 low could, therefore, generate a slide to the 107 level. Today’s New York close will consequently be more interesting than usual.