The Range Narrows in USD/JPY as 50 SMA Pushes it Higher

USD/JPY has been trending higher for a week but it is now forming a triangle and we might see it explode in either direction.

The 50 SMA is working as the lower triangle line

USD/JPY has been grinding higher for a week since it tumbled 5 cents lower on January 2. The uptrend has been slow but is consistent and the 50 SMA (yellow) is helping it develop with ease. USD/JPY has been finding solid support at this moving average during dips which have been pretty shallow.

Although, it has been finding it difficult to push above the 109 level which is some sort of support and resistance area. Yesterday, buyers pushed a few pips above 109 but the price returned down. The price found support at the 50 SMA once again. Once the stochastic indicator became oversold, which meant that the trend refreshed, the buyers got in again and resumed the uptrend.

I am beating myself up for losing that opportunity because it was a pretty straightforward trade. The candlesticks formed two dojis on the H1 chart which are reversing signals, so everything was pointing to a bullish reversal.

But I digress. Now we are back below the 109 level and the 100 SMA (red) is catching up with the price. This moving average comes at 109.20 and will likely provide resistance. That would squeeze USD/JPY and the triangle that is forming would close up.

In that case, expect an explosion in either direction. The upside is more favorable since the trend has been bullish for a week, but you can’t bet on it. So, let’s see what direction the break of this triangle will be in.

ABOUT THE AUTHOR See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

Related Articles

Comments

0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

HFM

Doo Prime

XM

Best Forex Brokers