USD/JPY Technical Highlights:
- USD/JPY working towards the apex of a wedge
- Breakout looks very near; trend, levels to consider
USD/JPY working towards the apex of a wedge
USD/JPY has been pretty much untradable in recent sessions with volatility dropping sharply. Last week’s range was less than a measly 70 pips. And while USD/JPY the past couple of years has behaved this way before (all too often), it has tended to at least provide the patient and nimble with a solid one-way move.
That time may be very quickly nearing as the wedge forming over the past six weeks is nearly complete. There may be a little whipsaw as price tries to escape the narrowing range, but once it gets going it could lead to decent-sized trade.
Which way will it break? It would appear that USD/JPY wants to head lower based on the trend/channel structure in place over the past several months. In this case, then the July 31 low at 10418 could quickly come into play, and possibly worse towards the lower parallel of the channel, in which case sub-10300 becomes a possible target.
A downside break is only one possibility here, a break against trend could develop. In this case, then the upper parallel of the channel over 10700 along with the 200-day MA at 10780 will come into focus. A breakout beyond these thresholds would be significant; a bridge we’ll cross should we get there.
For now, still need to be patient but the time for action may come any day. Again, keep in mind there could be some whipsaws in either direction before the final direction is decided.
USD/JPY Daily Chart (nearing the breakout point)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
