The past 3-4 weeks have brought a lot of volatility in the FX markets.
The general trend has been a run to buy on the US dollar.
However, other safe-haven currencies notably the JPY & the CHF are finding buyers compared to other majors.
The Swiss franc has long been a favored currency to acquire at times like this. However, when the stocks are on a rocking boat as they are now, JPY tends to do better than most.
Hence, it’s no surprise that the JPY has found strength as the next best performer after the US dollar.
The daily chart above is as simple as it can be. It cuts through the noise and only highlights a channel where the current price action, in general, could take place, until a break to either side is achieved.
The blue channel is in play. The black line in between serves as the support it needs to break and close under, to test the lower mark of the channel.
It is normal that price gets to retest the breakout region, and then starts to head back in the direction of the breakout. This actually shows strength on the break structure. It also allows traders to get into a trend move (albeit a short one).
The 2-hour chart below shows current price action and the expectations going forward.
The mid and the lower blue trendlines indicate the current channel it is gravitating in. The dotted red trendline is representing a current break structure within this small channel. Price testing to this red dotted line and failing to move higher shows the seller’s market, and vice versa.
A move higher to this channel on the two-hour would spur a rally to the upper blue trendline. In this case, the mid and upper blue trendlines will form a channel where we can expect price to behave.
The upper blue trendline represents the level of the daily chart breakout zone.
At present, a small correction is underway and there is a probability that the price can initially break higher to test the prime breakout zone.
It either ends correction and starts falling to the base of the daily channel support, or this break has been fake and the next move is up for 113.00 and beyond.