The USD/JPY is gearing for another move
In a rather volatile day for the European equity markets, U.S. and Japanese stocks traded in a subdued fashion and the USD/JPY pair followed due to lack of substantial data releases. The pair has been rangebound for the most part of Monday trading and a very narrow range at that.
Looking at the charts we are seeing a channel formation in this pair which is keeping the USD/JPY between 121.05 and 121.45 for now. These are also the points at which we will be looking in order to realize some gains by trading binary options.
The downside trigger point for us is a close below 121.05 on an hourly basis. If this occurs, we would be buying daily puts in the pair for tomorrow's expiry (17th of March). As data from the U.S. has not been very important today, we still have seen yet another set of benign economic indicators supporting our views that the U.S. economy is slowing down.
That said, the Japanese economy is not at all rosy, and despite the pressure on the U.S. dollar exerted in the aftermath of the weaker than expected manufacturing and housing data today, we have seen the pair rebound towards the high side of the range towards the end of the trading day.
On the upside we will be looking for a close above the above mentioned 121.45 level and again - on an hourly basis. The main trigger for a move higher could be the press conference of the Bank of Japan tomorrow in early European morning, or some rhetoric in the Bank of Japan monetary policy statement released earlier.
In any case both sides of the trade seem possible at this point in time and only careful observation of the charts will bring us a fresh perspective onto this matter. The main prospects for a move lower can be an equity sell-off or some sort of a nasty surprise in tomorrow's U.S. housing data.