The USD/JPY pair had a slightly positive session during the day on Wednesday, but it continues to tighten overall. After all, the highs are getting lower in the lows are getting higher. Why we don’t necessarily have an ascending or descending triangle, you could make a bit of an argument for something akin to a pseudo-symmetric triangle. In other words, pricing is getting tighter and tighter, meaning that we should have a break out in one direction or the other relatively soon.
Part of the problem with this pair is that the Federal Reserve threw a monkey wrench into the entire situation. After all, they didn’t raise interest rates which was the expected outcome of the last meeting. They also suggested that perhaps the global economy is slowing down, and that is one of the major reasons they didn’t move forward. With that, it will certainly influence on what happens in the commodity markets, and the general risk appetite of global markets overall.
USD/JPY is very risk sensitive
This pair does tend to go higher if the overall risk appetite gets stronger. With that being the case, I think that it’s only a matter time before we break out to the upside because quite frankly we have known for a very long time that the global economy is shaky. In fact, this is been going on for roughly 7 years, and sooner or later you have to normalize. If we fall from here, I’m afraid that there is a massive amount of support near the 118.50 level, so it’s not really until we get below there that I can make an argument for selling. For buying on the other hand, I think the 122 level will be targeted, and then eventually we would breakout above there. Regardless, it’s become very obvious to me that the 120 level is essentially “fair value” in this market, so short-term traders will probably continue to push this market back and forth. On a break out above the top of the range for the last several sessions, I would go ahead and start buying, cognizant that breaking above 122 will probably take some time.
