By: Mike Kulej
The Japanese Yen has become very quiet recently. This is true in relation to all currencies, but is perhaps most visible against the US Dollar. This pair has not made a meaningful move in weeks and is consolidating.
After reaching the post-intervention high of 85.52, the USD/JPY pulled back to 79.56, which is at the 62% Fibonacci retracement level. That was rather typical; the 62% and 50% levels are often reached during price correction within a trend. The price, however, did not resume the uptrend, settling into a consolidation, with an uncertain outcome.
We can that the ADX, a good trend indicator, shows extremely low reading, meaning no trend. The Average True Range has also dropped significantly. The USD/JPY is clearly waiting for a catalyst that will push it either way.
Since there is no strong indication about a possible direction for the next price swing, it is best to wait and let the market provide additional clues. In case of the USD/JPY that could be watching the most recent price extremes: the support at 79.56 and the resistance at 82.23. They are just outside the Fibonacci cluster, and breaching either one could be a start of a larger price move in that direction.