Can't keep the pressure on...

The USDJPY:

  • Fell below the lowest close gong back to September 7 (at 119.72)
  • It fell below a trend line (at 119.71 - I know it is debatable)
  • It took out last weeks low (at 119.62)

But, like the other tries going back to early September, the dip failed.

The upside tries have not been too successful either. The last 26 trading days has seen the high close come in at 120.60. There have been looks above that level (all in September), but momentum fades.

In October, the trading is even more confined. The high close in October is 120.448. The low close in October is 119.88 (not counting today). The range for the month is 189 pips. That is the lowest month range since June 2014. There has only been 5 months going back to 1995 with more narrow trading ranges (see chart below). Do we extend above the high or below the month low?

Eventually, there will be a change and a "real" break.

Does it hurt to trade the breaks in hopes for the run? If you trade near the break level and define risk near it, no.

What will be the catalyst? Often times we don't know but if you asked 100 people, they would most likely say Fed tighten/BOJ more stimulus SHOULD lead to a break higher. That would be the fundamental expectations..

Can you trade the fails? That works too. And risk can be defined against the levels too.

Do you take a longer view and ignore the noise? You can do that too. Be sure to apply proper risk. You want your risk to be too high (i.e. risk too much of your account). If the "market" was so sure, it would be trending. The "market" does not know which way it wants to go. So it can go either way when it does decide.

For today, the "market" had a shot to give it a run. It failed on the test. Sellers covered. Buyers came back in.