USD/JPY: Range Bound, Pending a Break, But Which Direction?
Good afternoon trader's,
Over the past week, we have not seen any big moves on this pair as we find ourselves currently range-bound between the 109.00 daily support level and the 110.00 key monthly resistance level. Since my last update on this pair where we had seen price struggle to break the 109.000 resistance level, we have now managed to break through and come back to retest this level as support.
On my chart attached, we can see once price did manage to break above 109.00 and retest this as support, we actually created a new higher-low, needed to create a structure to the uptrend, before heading towards the key resistance level of 110.000. From here we then saw a short sell-off as price rejected this area before making another failed attack to break through. This movement created a Head and Shoulders pattern on the 4-hour chart which helped trigger short sellers into the market and force a break below the ascending trendline. Shorts were looking good as far as the 109.00 level however to invalidate the uptrend we needed to break this level as it is acting as the last higher-low for the uptrend, (labelled on my chart) and the last level of support to sustain the uptrend. The pressure from short sellers ran out of steam and we again found support at the 109.00 level, creating a double bottom on the 4-hour chart as this was now the second test and rejection of this level.
Currently, we are still range bound and waiting for a break out of my highlighted range. Today we are seeing a bullish move higher as we look to attack the top of range / 114.000 level once more. This fourth test of this level should see price finally break out and on doing so, I anticipate the next large move in the market. Should we break above the 110.000 level my next upside target would be 110.40 and then 111.00. Should we once again fail to break the monthly key level we will see price move back quickly towards 109.000 and on a break, a decline to 108.000.