Down -2.2% on the quarter

The USDJPY is lower this quarter - falling from 122.48 to 119.83. The fall represents a 2.2% decline. This erases the 2% gain seen in Q1. In the 1st quarter the price was up a scant 0.2%.

So a -2.2 decline minus a +0.2% gain in 1Q minus a +2.0% gain in 2Q = unchanged on the year. Indeed the year closed at 119. 845 and the current price is 119.87.

Talk about going no where.

Other facts:

  • The low for the year came in at 115.838. The high for the year was 125.845. The equals 1000 pips. The range is very similar to 2011 when the low to high trading range was 996 pips At the lows the USDJPY got very comfortable going sideways. In fact the price stayed in the 100 pips box for 26 months. The current market has been in the 1000 pip box for 11 months. That does not mean we have 15 more months of up and down, but it does mean focus will remain on finding break levels
  • The correction off the May 2014 base held near the 38.2% at 116.288 . The low extended to 116.09 before rebounding strongly. That day was the Dow down 1000 point day and the market was very illiquid. Nevertheless, the area held
  • The lowest trading range for a quarter going back to 1999 was about 300 pips. The average is 875 pips. In the 3Q the range was 911 pips, thanks to the plunge in August. In September the range was 271 pips.

Looking at the daily chart below. the 50% of the years trading range is at 120.75. The 50% of the move down from the August high comes in at 120.68. The 200 day MA comes in at 120.87. The price moved above all those levels on 5 separate occasions in September but had no closes above. If we are going higher, a move above 120.68, 120.75 and 120.87 is needed and we need to stay above each. KEY LINE IN THE SAND ON the topside as we enter a new quarter.

On the downside - also on the daily chart (see chart below) - the 118.20-49 has eight swing lows. Some were minor swings (2, 4, 5), others were larger. ON the "Dow down 1000 day", that floor was broken, but rebounded and then the market used the level as support again (at 7 and 8 in chart below). If we are going lower a move below 118.20-49 is needed.

I don't know which way we are going. The market does not know either. A trend for the pair is two- days since September 10. The highest close is 120.60. while the lowest is at 119.72. So 88 pips has confine the closes in that period.

So on the wide, we sit between the 120.87 and 118.20. I suspect that traders will look to lean against those levels on tests and ultimately look for breaks that will take the pair to the next targets at the 115.83-116.09 on the downside and the 100 day MA on the upside at 122.41. Breaks of those will likely require a new story. It might be strong employment, Fed tightening. It might be no Fed or something extra from the BOJ.

What we have to realize as individual traders is that trading extremes is still a viable strategy with stops on a break. If you want to trade between, keep risk limited as the market can go either way.