USD/JPY Range Trading Awaiting Directional Move

USD/JPY (daily chart as of October 18, 2013) has been trading in a large narrowing range since May 22 (blue lines on chart), which could be considered a correction of the prior strong uptrend that extended back to September 2012. Current price is trading above and approaching the daily EMA 200, which is rising and turning flat. If the EMA 200 acts as strong support, price could turn up to test the upper edge of the narrowing range. The currency pair needs a catalyst to break out of that range; so far neither the non-tapering nor the government re-open has been that catalyst. The next risk event will be the September Non-Farm Payrolls report that is scheduled to be released on Tuesday, October 22.

Resistance levels above:

1^st resistance: 99.00 or the bold green uptrend line

2^nd resistance: the upper edge of the narrowing range

3^rd resistance: 100.60 (September 11 high)

Support levels below:

1^st support: 96.50 (October 8 low) or the lower edge of the narrowing range

2^nd support: 95.80 (August 8 low) or the daily EMA 200

3^rd support: 93.80 (June 13 low)