In the lower 100’s, USD/JPY faced solid supports at 100.01 and 99.76 yet USD/JPY’s climb had to clear above 103.74 for any impetus higher as it traded dormant inside a wide 373 pip range. The vital break at 103.74 achieved to now place USD/JPY inside a smaller 288 pip range between 103.74 to next big break point at 106.62. On the assumption 106.62 breaks higher then ranges compress yet again to 86 pips as the next hurdle to cross is located at 107.48. The new range becomes 106.62 to 107.48.
In a larger view and as is found in EUR/USD, GBP/USD, EUR/JPY, GBP/JPY and others, currency prices are not only on the verge of vital and important breaks but those vital break points causes current prices to trade in no man’s land without an actual trend direction.
In USD/JPY below, trend down begins at 103.97 but 103.97 bumps against must clear 103.74. An uptrend begins at 109.28 but bumps against 107.48. If 107.48 clears then 180 pip range is located between 107.48 to 109.28. Overall 107.48 allows USD/JPY to become located in no man’s land again only this time on the other side of 106.62.
If 106.62 clears, built inside the price structure is tough resistance at 106.83 and 106.88 then 107.05 and on to 107.48. USD/JPY 106.62 drives current prices and decides lower or higher. The path to 103.97 is worse as first clearance is located at 105.29, rough supports at 104.63 and 104.30 then 104.13 and on to 103.97. Overall, the range current is 265 pips from 103.97 to 106.62 and as mentioned 288 pips from 106.62 to 103.74.
Brian Twomey, Inside the Currency Market, btwomey.com