What is up with USDJPY? 200 pips trading range. Will it break?

FX:USDJPY   U.S. Dollar / Japanese Yen
For more than a month now, $USDJPY             has been trading inside a 200 pips range, between 119 and 121.
We've seen this pair stuck between 119-121 in the past (last time it was for two months between mid March and mid May) and the result of the breakout was a 600 pips rally towards 127.

In which direction we should expect $USDJPY             this time? Will it happen today following NFP? or are we going to wait another month, till next FOMC meeting (end of October), to see a breakout of this consolidation zone?

As you can see in chart, $USDJPY             created its first lower low on August following the completion of two harmonic patterns ( Cypher and AB=CD ).
Since August's lows, $USDJPY             pulled back above the 119 level and it is trading below its daily 200 SMA line.
The daily SMA lines are all lined up above the price, providing plenty of reasons to assume that $USDJPY             will end up breaking the support zone and continue lower, but it's the weekly chart that provides a reason to speculate on another push higher as the price is sitting above the 50 weeks MA line (support).

Basically, as long as $USDJPY             is between 119-121, any directional trade will be a gamble.
The bears can use the daily chart with the 50 and 200 SMA lines as resistance to short $USDJPY             and expect the 119 breakdown and the bulls can use the 50 weeks SMA line as a reason to buy $USDJPY             with tight stop loss.

If $USDJPY             will indeed break below 119, it could turn into a free fall. I doubt that we will see longer term move in $USDJPY             before we will get the first rate hike from the Fed, but bellow 118.5, there's only 117 that that can stop this pair from reaching much lower levels.

If $USDJPY             will break higher, it could complete a bearish Gartley pattern near 123.
The PRZ is between 123 and 126 and due to the momentum gaining $USDJPY             is currently having, I assume that the price will rally above 123, perhaps testing the X zone if indeed it will explode above 121.

Daily chart shows bearish potential - As long as $USDJPY             below 121. Potential targets -119, 118.5, 117
Weekly chart shows potential upside as long as the price remains above the 50 SMA line - Potential targets - 121, 122, 123-125 (PRZ of bearish Gartley )

Beware of false breaks and spikes during and after NFP.

Trade smart,

Tomer, The MarketZone
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