The USDJPY is currently trading in a range defined by moving averages. The market looks uncertain, with no clear direction. Throughout the week, prices have moved between significant technical levels on the 4-hour chart.

Price Action Analysis

Earlier this week, the pair started below the 100-bar moving average, tried to break through, but encountered selling pressure. This caused a drop to the 200-bar moving average at 146.725, where buyers stepped in and prices bounced back, a pattern that has repeated several times this week. Yesterday, the pair climbed but again could not surpass the 100-bar moving average at 147.944 and pulled back. Today, it tested the 200-bar MA for the second time this week, finding support and rising to 147.44, which is between the 200-bar support and 100-bar resistance. Traders are operating within this range, respecting the limits set by moving averages but not making strong commitments beyond them. A breakout above 147.944 or below 146.725—with momentum—could start a new trend in one direction. Until then, we can expect ongoing two-way flows and tactical trading in this range. The USDJPY pair is moving sideways, stuck between its key moving averages. This indecisiveness reflects uncertainty in the market about future actions from central banks. Traders are buying near the 200-bar support at 146.725 and selling near the 100-bar resistance at 147.944.

Trading Strategies and Market Outlook

The US dollar is finding support from recent economic data, which helps explain the bounces from the lower end of the range. For example, last week’s July inflation report came in slightly above expectations at 2.8%, making a Federal Reserve rate cut less likely. This fundamental strength is providing support for the pair for now. However, the risk of intervention from Japan limits any significant upward movement. We are nearing levels that triggered major action from the Bank of Japan in late 2022. Officials have already warned against rapid yen depreciation, keeping sellers active near the 147.944 resistance level. For derivative traders, the narrow range suggests that selling volatility could be a good strategy right now. Selling strangles—where you sell both an out-of-the-money call option and an out-of-the-money put option—allows traders to earn premium as long as the pair stays within those limits. Given the current indecision, this can be an appealing short-term strategy. Alternatively, traders anticipating an end to this quiet period can prepare for a breakout. Buying a straddle or strangle positions traders for a significant price swing in either direction, which might follow a decisive break from the current range. This strategy keeps initial costs clear while offering good potential upside if momentum picks up. Looking ahead, we’re watching for the late August central bank symposium, which could provide the catalyst needed to break the current stalemate. Until a sustained move above resistance or below support occurs, expect the choppy two-way flows to persist. Be ready for increased volatility if any of those critical moving average levels breaks. Create your live VT Markets account and start trading now.

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