During the last twenty four hours up to the GMT time zone morning, the USD/JPY revealed two channel patterns. Namely, a medium scale channel up pattern and a junior channel down.
In theory, the pair is set to decline below the 107.40 level. However, there are more than one ways to get there.
Economic Calendar
On Thursday, at 12:30 GMT the weekly US Unemployment Claims are set to be released. They could create above average volatility.
On Friday, the US Producer Price Index and US Core Producer Price Index are set to be released. In the recent past they have not caused notable volatility.
Take a look at all of the historical reaction tables by clicking on the link below.
USD/JPY short-term daily review
The near term forecast is based upon the assumption that the two channel patterns discovered on Tuesday would hold and the three hourly simple moving averages would provide resistance.If the junior pattern's lower trend line provides support and the 55, 100 and 200-hour SMAs provide resistance, the rate would decline to the supporting trend line of the medium scale channel up pattern.
On the other hand, note that a failure of the junior pattern's support could result in a sharp decline. In the meantime, it is unlikely that the resistance of the SMAs and the weekly simple pivot point in the range from 107.50 to 107.60 could be broken.
Hourly Chart
On the daily candle chart, the rate trades between the resistance of the 100-day simple moving average at 107.75 and the support of the 55-day SMA at 107.40 level.
The rate should eventually break out of this squeeze. Usually a break out of a squeeze occurs with a decline of volatility, which is followed up by a sharp move up or down.
Daily chart
Read More: Technical Analysis
Traders remain short on USD/JPY
On Tuesday, on the Swiss Foreign Exchange 61% of open position volume was in short positions
On Wednesday morning, 60% of open position volume was short.
Meanwhile, trader set up pending orders in the 100-pip range were almost neutral, as 53% of orders were to buy.
Previously, the orders were 56% to sell on Tuesday.