The USDJPY trading week last week was 59 pips in total. That is the 2nd lowest range for a calendar week in 2020. The lowest range was 57 pips on the February 9th trading week. The market non-trended. Non-trending transitions to trending so that is a trade thought/possibility this week.
When markets are non-trending, look for trending clues. Traders will be looking for clues that get the pair out of the "mud" that has confined trading.
Drilling to the hourly chart see chart above), the non trending market for the week converged the 100 and 200 hour MAs near 106.14 (106.156 for the 200 hour MA and 106.133 for the 100 hour MA). The price settled right at 106.145. By settling there, traders in essence deferred to this week to make the 1st play away from those moving averages.
The price did trade above and below those MA (as they do in non trending markets) last week. So getting above and below could see more up and down whipsaws (not out of the question). However, it does give a bias clue (bullish above and bearish below). Having said that, it is important to see another break in the direction of the extension (i.e. you want to see extensions in the direction of the move).
What levels are of significance to get the pair out of the "mud" from last week's non trend week?
If the price is to move higher, the next hurdle would be a move above the 106.258 to 106.296 area. That is home to the swing highs from Wednesday, Thursday, and Friday. A trend line also cuts between that area at around 106.27 (and moving lower). Getting and staying above that level should see more upside momentum and move the price away from the converged MA levels. Above that are the highs from Monday and Tuesday of last week at 106.376.
That progression would be the start of a roadmap out of the mud to the upside for the USDJPY.
If the price is to move/trend lower - and away from the 100/200 hour MAs - the 105.976 to 106.00 area is the first hurdle that traders would want to see the price get and stay below. The low from September 3 stalled in that area. On September 8 and 9 (Tuesday and Wednesday) the price traded above and below the level but support was reestablished on Thursday (see green circles 4 and 5).
A move below that area would next target the broken 38.2% of the range since August 28th at 105.861 and the low from last week at 105.782. That low was has been an important swing level going back to August 27 (see black numbered circles) which increases the levels importance technically going forward.
When the market non trends, the buyers and sellers are in balance. Putting it another way, "the market" does not know which way it wants to go.
Getting out of the mud (moving away from the 100 and 200 hour MA) is what traders look for to give confidence for freedom either to the upside or the downside.
Like being stuck in real mud, solid ground tends not to be far away. However, there may be some soft spots until you reach solid ground. For the USDJPY getting and staying above 106.258-106.296 and then 106.376 puts the bulls on more solid ground.
For the bears, getting below 105.976 -106.00 and then 105.782 would be the path to solid bearish ground.