USD/JPY Grinding to Halt and Long-term Equilibrium

The USD/JPY is building a long-term consolidation zone. Price has been so indecisive that the long-term moving averages are all flat and on top of each other. What can be expected for the remainder of 2020 and 2021?

Monthly chart

The USD/JPY is building a massive range after a clear 5 wave pattern up before 2015 followed by a strong counter trend wave A. But price volatility has been steadily decreasing ever since. The lack of price movement is now so low that 3 small monthly Doji candles have emerged on the chart. The candle before that was large but closed a Doji too with massive wicks on both ends.

The lack of any direction will make trading breakouts very risky, if such breakouts will occur in 2020 at all. Any breakouts must be followed by flag patterns on the weekly or daily chart to avoid false breakouts. There is probably a higher chance of price bouncing at the support or resistance and staying in the range. An ABCDE triangle pattern could also emerge as a possible scenario.

Good trading,

Chris Svorcik

The analysis has been done with the indicators and template from the SWAT method (simple wave analysis and trading). For more daily technical and wave analysis and updates, sign-up to our newsletter