USD/JPY poised for breakout of consolidation

<p>USD/JPY (daily chart) has been mired in a sideways consolidation for at least three months now, unable as of yet to extend the bullish trend […]</p>

USD/JPY (daily chart) has been mired in a sideways consolidation for at least three months now, unable as of yet to extend the bullish trend that was previously in place from September 2012 to June of this year. Since the multi-year high of 103.72 was established in late May, the currency pair plummeted by almost 10% before recovering partially and embarking on a series of consolidation patterns.

From late June to late August a slightly downward-sloping parallel channel brought the pair down to its 200-day moving average, which was respected as support on at least two occasions. After the price broke the channel to the upside in the beginning of September, it made a failed attempt to rise above the key 100.00 level, only to fall into the current triangle pattern.

As this triangle has developed for the past several weeks, price volatility has progressively contracted and the pair should be poised for a potential impending breakout. On an upside breakout, the key level to watch continues to be 100.00, a breakout above which should target the 103.00 resistance level. A downside breakout should meet strong support around the noted 200-day average, followed by the 97.00 support region.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.