A little bull. A little bear.

The EURJPY has been showing a little bull and a little bear today in a hit or miss trading environment. In the process the pair is confining the pairs action into a tighter coil/a tighter range. What do I mean and what are the implications?

Looking at the hourly chart, the price action today initially had support buyers against the 100 hour moving average (blue line in the chart above). The rally higher then found resistance sellers against the 200 hour moving average (green line in the chart above).

In the New York session, the 100 hour moving average was breached to the downside. The price dipped down toward lower trend line support, but could not reach that target. As London traders look toward the exits, we are getting a little bit of a move back higher as the price extends back above the 100 hour moving average,

All of this dialogue is evidence of a market that is unsure of the directional bias. Traders are reacting to technical levels, but not necessarily falling in love with the direction. Eventually, there should be a break and a run outside of the boundaries defined by the MAs and trend lines on the topside and at the bottom.

In the meantime, look for traders to go with the flow. The recent flow has the price above the 100 hour MA at the 134.559 level currently. A move above the 38.2% at 134.78 is the next target. Then the 200 hour MA at 134.919 (green line). If that fails (i.e., the 100 hour gives way, the pendulum will swing more toward the downside targets including the days low and the lower trend line (at 134.23 and 134.16 respectively).

Non trend transitions to trending but that may take some time. There are reasons technically to be long. There are reasons technically to be short. So traders will tend to go with the flow and define/limit risk against extremes. Alternatively traders can prepare for a break and run when the market is more confident with the directional bias.