Looking at this USDJPY pattern, you can immediately tell the market is in a state of “hesitation”. Neither side is clearly winning. News is still divided: the USD is being pushed up by inflation and oil prices, while the JPY is facing expectations of a firmer BOJ stance, but that hasn’t been strong enough yet. As a result, the price is moving sideways, but slightly upward.
Looking at the chart, the price is still moving within a slightly upward channel, with each low higher than the previous one. The 158,600 level is providing excellent support; every time it touches it, buying pressure jumps in. Above 159,800-160,000, it’s a short-term ceiling; prices are immediately blocked upon reaching that level, but there are no signs of a strong downward push yet.
The interesting thing here is that the price structure is being “compressed,” with the range shrinking – a sign of impending change. However, given the current situation, I still lean towards a breakout upwards rather than a downward break, as the USD still has many reasons to maintain its strength.
In the short term, USDJPY is likely to remain within the 158,600-159,800 range, but will tend to retest the area above more often. If there is more negative news (risk-off, rising oil prices), a push to 160 would not be surprising.
Don’t trade with FOMO at this point. Keep it simple: buy below – sell above, that’s the best strategy.