Follows in the EURUSD footsteps
Like the EURUSD (see prior post), the USDJPY had a disappointing break as well.
As outlined in a prior post on this pair, the 112.815-93 I see as a dividing line for bullish and bearish (see prior post here for the technical reason why).
The last week there have been four separate breaks above that area and four failures. The 4th time today was not the charm.
That is not good. As a trader, you look to buy a break in anticipation of momentum in the direction of the break, but then have to sell out on the failure.
We can be sad or we can be a realist.
Like the EURUSD, the "market" is saying, "it does not know what it wants to do". So it trades a little above and then a little below. Frustrating... I know but it is what it is.
Taking a broader view, the ups and downs has the pair trading in a 105 pip trading range over the last 5 trading days. That is not a lot. The low is 112.20. The high is 113.25. Closer to the highs is the 112.815-92 area (yellow area on the hourly chart above). I still consider it a level to get above (and stay above).
As a result of the consolidation, the 100 and 200 hour MAs have chugged higher too. The price is currently around the 100 hour MA at 112.737, but looking over the last 7 trading days, the 200 hour MA has been the support target (see green numbered circles). The 200 hour MA comes in at 112.442. That MA line will be eyed now for more technical clues. A move below would be more bearish.
The narrow trading range of the USDJPY and the technical levels in the area, is like a spring coiling. Right now, "the market" is unsure if the spring will be higher or lower. However, there seems to be some technical levels that traders can use to define the bias/risk. On a break, look for momentum to kick in.
