Drilling down...
Daily chart
I look at the USDJPY daily chart and wonder, "Are we heading into a repeat of a year ago when the pair traded back and forth all the way into August?"
It certainly looks that way.
Since peaking in December the price has moved down and up and down and up again.. The highs are lower. The lows are higher. The price today is centered around the 50% of the move down since the peak (at 118.658). The last 6 trading days has seen the price trade above and below this level and 9 of the last 10 trading days has touched that midpoint price. The topside trend line off the highest highs comes in at 120.30. The low trend line comes in at 117.76. The last 6 trading days are confined between the 61.8% at 119.407 on the top and 117.908 on the bottom (the actual low is 118.225). The market is getting more and more compressed.
Hourly chart
The hourly chart has the 100 and 200 hour MAs are moving sideways and the price is between them with 119.028 on the top (200 hour MA green line)) and 118.79 on the bottom (100 hour MA). The price is testing the 100 hour MA as I type. The last move off the high, corrected to the 50% and stalled. The price is below the 38.2% of that move down. Today, the peak got above that level (and the 200 hour MA). That break stalled. Bears in charge below 119.028-077.
5 minute chart
The price just dipped to the 50% of the days trading range and the 200 bar MA. Earlier in the London morning session (see 5 minute chart above), the price move to the upside stalled at the 200 bar MA before moving higher.
The current test of the 200 hour MA (green line) is similar but with the price moving lower not higher. We will learn more about the selling if the price can now stay below the 100 bar MA (blue line). If the recent break below that MA, is not taken back (i.e. don't get above the 118.92), the move down is looking more and more like the move up from earlier, and we can expect a continuation lower. Watching the 100 bar MA at the 118.92 for the sellers.
I don't want to build up any expectations going forward. The price action is converging. The pair today got a boost from the initial claims but Philly Fed did not help when it needed it. We may go from number to number and follow the most recent beat or shortfall vs. expectations.
Typically, when things like the MA starts to converge, there should be a move away with the price. The problem is, there needs to be a catalyst. That is still lacking with the effects of the US employment gains a distant memory (was it an aberration?), the US economy taking a breather, traders wondering if the Fed will get cold feet as June approaches, and Japan wondering if too weak a yen is bad for the economy. Add turmoil and uncertainty in Europe and other countries throwing their hat in the ring for "Who wants the weakest currency?" and you get a slowing of the trends. That is what we seem to be seeing. So be on the lookout for the little clues that the price si starting to move but it may be that the market simply steps from one rock, to the next rock and back again, and so on and so on....
