USD/JPY Technical Analysis

On Friday all eyes were on Bernanke as it was thought that he would lay some ground for the FOMC meeting and decision on 13^th September.Although it was said that action was necessary to facilitate the labour markets,traders were still unsure whether QE3 was coming or not.This week we won’t see quantitative easing affecting our charts.

The Japanese Yen has been strengthening and has recently caught the eyes of the Bank of Japan and Ministry of Finance.Meanwhile,the US Dollar has been declining itself again.The price action and low volatility still haven’t made a case for intervention,but Bank of Japan may intervene at some point.They are known for stealth tactics.

Examining the 2 hour frame chart above,we can see that the pair been moving sideways since the past month.However,the past 10 days saw a significant sell-off,after which the price has been edging lower.Currently,the pair is hovering between the support level of 78 and the resistance level of 78.7,and it is most likely that the price should stay here for most of the time. However,in case it breaks the support level,a short trade could be initiated,whereas a long trade could be executed in case the resistance level breaks.

MACD has been moving down and sideways throughout the past week,but has stayed below 0. This shows that there is a bearish atmosphere as the price continues to move within the support and resistance levels.However,currently MACD is edging upwards,which may indicate signs of a weak rally – since it is still below 0.

Stochastics have been moving upwards lately and should reach the overbought level if the pace continues.They are likely to oscillate less than 10 times throughout the week,so they should be taken in consideration with other signs.

Since the pair is trading sideways,one could look for signs of price oscillations.If these oscillations become long enough,one could initiate long and short trades along the waves.