By: Mike Kulej
One of the least active currency pairs of the recent months has been the USD-JPY. So far this year, the second most liquid financial instrument in the world has been stuck within a 300 pips narrow range, drifting sideways, especially as seen on a daily chart.
On a smaller time frame, however, the Dollar-Yen is slowly starting to be a little more active. The intermediate term chart is showing an increase in the ATR, even if it is still low by historical standards, and the price direction as a whole is starting to slope higher.
Interpreting the Chart
That is best exemplified by a trendline, which is climbing at a gradual angle. It appears that the price has just bounced off it, for a third time, making progressively higher lows. On Friday, the USD-JPY poked above the 100 SMA and the Ichimoku cloud, before pulling back before the markets closed.
Now we need to see the price move above the 83.00 level, Friday’s high. If that is achieved, 84.00 is the next important resistance, which is the key to a more substantial rally. On the downside, the USD-JPY is very close to the trendline that, so far, provided a solid support. Chances are it will hold again.