USD-JPY is Still Tightening

By: Mike Kulej

The Japanese Yen has become a poster child for an “indecisive market”. With the Bank of Japan trying to convince the world that the JPY is too strong and should weaken, while market participants are seeking perceived “safety” of the Yen. As a result, the USD-JPY is moving sideways in ever-smaller swings.

USD-JPY Analysis February 1, 2011


At current level, the price is in the middle of two congestion zones. The inside one is contained between 80.90 and 84.50, while the larger, outside congestion spans 550 pips - not much for a major currency pair over a half-year period.

Stalled Market?

Just about all technical indicators on the daily chart are lifeless, just like the price itself. The normally sensitive Stochastic indicators rarely become oversold or overbought these days, the ADX shows no trend with extremely low reading and the ATR just rebounded from the lowest level in years.

The good news is that markets cannot contract forever. Eventually the volatility returns and the price starts to break through nearest resistance/support levels in a major move. Chances are that the USD-JPY will become significantly more volatile soon, which makes it worth watching. 

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