USD/JPY Bounces Off Medium-Term Uptrend Ahead of Fed

USD/JPY (daily chart as of October 29, 2013) bounced off the medium-term uptrend line (connecting the June 13 low and the October 8 low) on October 25, but is still in a large narrowing trading range (blue lines on chart), which has been in place for more than five months. The range is now getting tighter from around 97.00 to 99.00. On Wednesday, October 30, the FOMC will release its monetary policy statement following the Fed’s interest rate decision, a big event risk for the coming trading sessions. We will see if the Fed will begin to reduce the purchase pace of mortgage-backed securities and long-term treasuries, or QE tapering.

Resistance levels above:

1st resistance: 99.00 (October 17 high) or the upper edge of the narrowing range

2nd resistance: 100.60 (September 11 high)

3rd resistance: 101.50 (July 8 high)

4th resistance: 103.70 (May 22 high)

Support levels below:

1st support: the lower edge of the narrowing range

2nd support: 96.50 (October 8 low)

3rd support: 95.80 (August 8 low) or the daily EMA 200

4th support: 93.80 (June 13 low)