Forex Technical Update
USD/JPY1H Chart 5/29/2012 9:25 AM EDT
It's nothing close to the EUR/CHF's volatility squeeze, but there is a bit of a squeeze, or you can say congestion in the USD/JPY 1H chart. You can see that the market is making lower highs, and higher lows, reflecting a slowing of volatility. The RSI has resorted to the 40-60 range, reflecting consolidation momentum. Also the moving averages are squeezing together suggesting that the market has been clueless in which direction to take in the 1H time-frame.
This sets up for a classic congestion breakout, which doesn't always translate into a strong directional clue, but in the short-term, we can be seeing some expansion of volatility after the squeeze and retest of consolidation highs or low. To the upside, the 80-80.10 area is the very short-term resistance, while the 79.00 area is the support. We are trading smack in the middle near 79.50 as the opening bell rings on Wall Street.
The upcoming risk event, Non-Farm Payroll on Friday is possibly causing the non-commitment of the market pick a direction in the short-term.
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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