USD/JPY Narrowing Range Trading below 100-Day EMA

USD/JPY (daily chart as of October 7, 2015) has been trading in a narrowing range since late August (two bold red trend lines on chart). This narrowing range is right below the 100-day EMA (bold blue moving average line on chart), which has been serving as a significant support line since late March (red arrows on chart).

Note that this trading range also forms during a downward movement from the August 12 high of 125.27, which makes it a potential continuous pattern if the 100-day EMA remains as resistance and the lower border of the trading range breaches. 

If the pair breaks out above the 100-day EMA, it would invalidate the potential continuous pattern and price could trade higher to test the double top around 125.30. To the downside, if the pair breaks down below the lower border of the trading range, price could decline further to 116.10 level. 

Support levels:

S1: trading range lower border

S2: 118.50 (multiple lows)

S3: 116.10 (August 24 low)

Resistance levels:

R1: 100-day EMA

R2: 123.00 (July 27 low)

R3: 125.30 (August 12 high)

Upcoming event risks:

Thursday October 8, 7:00am – GBP MPC Official Bank Rate Votes

Thursday October 8, 8:30am – USD Unemployment Claims

Thursday October 8, 2:00pm – GBP BOE Gov Carney Speaks

Thursday October 8, 2:00pm – USD FOMC Meeting Minutes

Friday October 9, 8:30am – CAD Unemployment Rate

Saturday October 10, 2:45pm – CAD BOC Gov Poloz Speaks