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Forex: USD/JPY consolidation continues as BoJ rate decision nears

FXstreet.com (Barcelona) - The USD/JPY traded in a very narrow range today, closing up 16 pips at 99.52. Market participants seem to be on edge with the pair approaching the psychological level of 100, and the Bank of Japan rate decisions approaches (due out on April 25th at 23:30GMT).

According to Chris Capre of 2nd Skies Forex, “Holding up the best of the main JPY pairs, the USDJPY has held closest to the key upside barrier of 100.00 with the smallest pullbacks, suggesting it is the most underpinned of all the JPY pairs. You can see on the 4hr chart below the price action squeeze that is happening with the successive HL’s (higher lows) and recent 20ema carry from today.” He went on to add, “The upside barrier is clear with the 100.00 level, but I don’t think traders are willing to buy here, so I’ll wait for either a deeper pullback towards 96.50, or a breakout pullback setup above 100 to add longs and rejoin the trend.”

From a pattern perspective, the set up on the daily chart is beginning to look like an ascending triangle. This is a continuation pattern within the current uptrend, and has bullish implications with measured move targets near 103.50. In order for the pattern to be completed, the pair would need to close above the horizontal resistance boundary at 100.00. Should this happen, but the pair close back beneath the 100 level in coming sessions, the pattern would be negated and could be looked at as a possible “bull trap.”

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