USD/JPY broke higher out of a long term consolidation yesterday. When a move like this happens people want to know: 1) Will it continue? 2) Should I be a buyer? Today, I don't think the answers are very straightforward.
To address the first question, I would say that we are above channel resistance. Theoretically this is a breakout, but also are hitting key resistance which is the golden 161% Fibonacci extension of the July highs to August lows. A lot of times when these levels get hit you can see a reaction. I would say sustain break above this level at 113.50 would be very bullish.
Addressing the second question, if you were not long already, looking for dips to be a buyer to reduce risk and maximize reward is usually the best bet. Can you miss trade by doing this? For sure you can, but chasing the market can a lot of times leave you with a poor risk reward which is not the way to successfully trade over time. Dips back to the 112.00 level should offer the best risk reward for longs.
