Talking Points
- Narrow range days point to impending directional volatility
- Stalls under 125.00
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
USD/JPY traded above 125.00 earlier this week before reversing sharply. A couple of narrow range days have followed as the exchange rate has ignored the volatility being exhibited in some of the other main pairs. However, narrow range days are usually a reliable precursor to impending volatility which suggests that today’s US employment data should lead to a decent move in USD/JPY or at least provide a stronger sense of direction heading into next week. Given the pair is breaking out of a six month consolidation our bias is higher here, but we really need to see this week’s high at 125.05 and then the highs from November/December 2002 around 125.50 overcome to get excited about the possibility of a more meaningful push to the upside. A move post payrolls under the lows of the week around 123.75 would warn a deeper correction is unfolding.
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USD/JPY Daily Chart: June 5, 2015
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 125.05 (WTD high), 125.50 (Late 2002 high)
Support: 123.75 (WTD low) 123.35 (Gann)
Strategy: Buy USD/JPY
Entry: Buy USD/JPY on a weekly close above 125.05
Stop: Daily close below 123.75
Target: Open
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.
