The USD/JPY pair rose during the course of the day on Wednesday, bouncing off of the 102.20 region. The 102 level below is supportive in the sense that it is considered to be “fair value” in this marketplace, being halfway between the support at 101, and the resistance at 103 for this massive consolidation area. I don’t see this market breaking out of these two levels, simply because we are in the dead of summer. However, one does have to notice that the last attempt to break down did not reach all the way down to the 101 level. That’s normally a sign that the market is ready to break out though, so I have to keep my eyes on the 103 level.

It will come down to interest-rate differential as per usual in this marketplace, and the US Treasury markets need to be watched in order to get a feel on where this pair is probably going to go. Interest-rate differential in the 10 year notes seem to be especially influential on this market, so if they continue to expand in favor of the United States, this pair will eventually break out.

In the meantime, playing a range bound market so clearly defined can be profitable.

I really like trading range bound markets in quiet scenarios like this, simply because it allows me to take my time with my trades, as the support and resistance becomes so obvious. This market has been stuck in a 200 pips range for most of the last year, and as a result I feel very confident in these areas mattering. However, I do believe that ultimately we break above the 103 level, and that this time the market should head to 104 next, and then ultimately the 105 level.

If we do fall from here, I suspect that the 101 level will continue to hold true, simply because the longer-term charts to look very supportive all the way down to the 100 level below there. With that, this is a “buy only” type of market, but it will be on the dips and in an over and over fashion.

USDJPY 81414

Related Articles
  1. Investing Basics

    What's a Treasury Note?

    A treasury note is a U.S. government debt security that offers a fixed interest rate and a maturity date that ranges between one and 10 years.
  2. Investing Basics

    Explaining Trade Liberalization

    Trade liberalization is the process of removing or reducing obstacles that impede the exchange of goods and services between nations.
  3. Economics

    Understanding Switching Costs

    Consumers incur switching costs when they receive a monetary or other type of penalty for changing a supplier, brand or product.
  4. Economics

    Explaining Strategic Alliances

    A strategic alliance is a business relationship between two or more entities that share recourses for a common goal.
  5. Investing Basics

    Understanding the Spot Market

    A spot market is a market where a commodity or security is bought or sold and then delivered immediately.
  6. Investing Basics

    What is a Settlement Date?

    A settlement date is the day a security trade must be settled.
  7. Investing Basics

    Explaining Risk-Adjusted Return

    Risk-adjusted return is a measurement of risk for an investment or portfolio.
  8. Taxes

    What IRS Form 8949 Is For

    Selling a painting or that lake property? Disposing of your fossil fuel stocks? You need to know about this IRS form.
  9. Investing

    Five Things to Consider Now for Your 401(k)

    If you can’t stand still, when it comes to checking your 401 (k) balance, focus on these 5 steps to help channel your worries in a more productive manner.
  10. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  1. Yield To Maturity (YTM)

    The total return anticipated on a bond if the bond is held until ...
  2. Gross Profit

    A company's total revenue (equivalent to total sales) minus the ...
  3. Interest Coverage Ratio

    A debt ratio and profitability ratio used to determine how easily ...
  4. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  5. Receivables Turnover Ratio

    An accounting measure used to quantify a firm's effectiveness ...
  6. Remittance

    The term most commonly refers to money being sent via mail or ...
  1. Are spousal Social Security benefits taxable?

    Your spousal Social Security benefits may be taxable, depending on your total household income for the year. About one-third ... Read Full Answer >>
  2. What are the best ways to sell an annuity?

    The best ways to sell an annuity are to locate buyers from insurance agents or companies that specialize in connecting buyers ... Read Full Answer >>
  3. How are non-qualified variable annuities taxed?

    Non-qualified variable annuities are tax-deferred investment vehicles with a unique tax structure. After-tax money is deposited ... Read Full Answer >>
  4. Why would someone change their Social Security number?

    In general, the Social Security Administration, or SSA, does not encourage citizens to change their Social Security numbers, ... Read Full Answer >>
  5. Are spousal Social Security benefits retroactive?

    Spousal Social Security benefits are retroactive. These benefits are quite complicated, and anyone in this type of situation ... Read Full Answer >>
  6. Is Argentina a developed country?

    Argentina is not a developed country. It has one of the strongest economies in South America or Central America and ranks ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!