USD/JPY - Will We Finally Find A Direction With This Pair?!
It has been a pretty gruelling past month on this pair for many traders, mainly swing traders who are trying to capture hundreds of PIPs per trade, but a playground for and scalpers as this is definitely their market right now.
For the past twenty days, we have seen price rangebound of 150 PIPs, failing to make a break higher or lower or show any convincing sign of a direction or trend which a wing trader can latch on to. Choppy markets like this mean we have to be patient and more often than not, the rewards at the end are quite substantial. Reason for this being that like myself, many are patiently waiting for the show of true direction and once this is established, lots of buyer or sellers jump in at once.
Last week we saw yet another break below 110.000 early in the week only to see price break back above and end the weekly strongly above. However with this strong close above, on my daily chart as shown, we have failed to break out of the downtrend and have shown rejection at this level, which is also where we have found previous resistance on three occasions at the 110.90 level.
Mixed views can be found on this pair when using top-down analysis. On the monthly chart we have a strong bullish candle, break back above 110.00 and looking bullish for the month ahead. On the weekly chart however we can see the price has once again struggled to break any higher than the former weekly resistance level and continue making any further ground, showing signs of exhaustion. The daily chart also showing mixes results adds to the reason why we need to wait until we have a break out of the current triangle that has formed before placing a trade. We can see the price has had a bullish run toward the end of last week but on Friday failed to break through trend line resistance. We have rejected 109.30 again a could possibly be forming a double top. The 4 Hour chart shows a similar story.
After patiently waiting with this pair so far, I am in no hurry to jump into a trade until the coast is clear. If price action does produce a strong close either above or below the triangle pattern, I believe this pair will move rapidly and possibly without a retest for confirmation. A break below and we are sure to make a fast move down towards 108.00 and a break above should see us break through the 111.40 level and push on to take out 112.000.
Since market open, we have spiked through last weeks high, rejected and formed a shooting star candle on the 4-hour chart. This could be some manipulation, taking out stops that would have been placed above last weeks high from short sellers before the next move down. The next few hours/candles on the 4-hour chart will be interesting to see if we can continue with some strong short selling in the form of a bearish engulfing or any sign of further rejection which could lead to taking a short on this pair. If we can not continue this morning's early momentum, the shooting star may be a false flag as we see price try to break the 110.90 resistance.