USD/JPY: heading for a break out

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 12, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Guatemala) - USD/JPY remains in a tight spot, but if triangles are anything to go by, a breakout could be looming one way or the other.

    On the daily chart, a symmetrical triangle took form and is becoming narrower on the near time frames while it could be argued that an ascending triangle is has taken form on the nearer time frame offering a bullish outlook.

    Analysts at Brown Brothers Harriman explained, the implied volatility (three-month) fell below 9.2% before the weekend, the lowest level in two months. This is also reflected in the narrowness of the Bollinger Bands. While we suspect the coil may continue in the near-term, it is setting the stage for a potentially powerful move. "

    USD/JPY fundamentals to drive price

    Either way, the fundamentals are likely to be the next driver to shift the pair out of the familiar ranges and send the price directionally one way or the other. Eye's are on the BoJ at the end of the month and any hint of moving closer to further easing could weigh on the outlook for the Yen and further support the upside on the divergence between the Fed and BoJ.

    The range to monitor for a break out stays with 118.60 and JPY121.60 with the four month level at 125.40 and the August 24, lows of 116.20.
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