Where does the path lead?

Today we have a pair of #USDJPY. The monthly chart shows that the pair rose almost vertically last year, but the peak came already in October, and since December the pair began to fall, and although the fall lasted only two months, it stopped already in January and the pair began to rise gradually. Now the pair is in a state of uncertainty — a sharp rise in February, almost the same fall in March and an April candle with almost no body but with long wicks on both sides. Such a candle usually indicates uncertainty in the market, or more precisely, that neither side has an advantage yet. Remembering trend theory, we can take into account the fact that despite this year’s volatility, the lows of the monthly candlesticks are slowly rising, which means that we are dealing with a beginning and still weak uptrend. Whether or not this tentative move will take us to last October’s high of 151.933, I don’t know, but if we take into account the fact that imports from Japan to the US are almost twice as high as exports from the US to Japan, the idea of a rising dollar to balance foreign trade looks quite tempting.

Let’s take a look at the daily chart. Here I have drawn a trend line that shows the pair gradually rising after hitting a local low of 127.215 on the 16th of January. After the March decline to the 129.631 level, the pair began a slow zigzag growth, and if we go back to 2020, something similar, only in the opposite direction, was observed from April to December. Such gradual movements have the potential to last for a long time, and perhaps we are seeing the beginning of one now. The pair may not break through the previous high, but it may come close enough to smooth out the US trade imbalance. Along with inflation, the trade balance is one of the Fed’s main targets, and next week’s rate decision could give Dollar buyers more confidence.

The pair has been slowly declining for several days now, so let’s take a look at the hourly chart to assess the prospects for this movement. The overall movement of the pair in April shows the multidirectional actions of market participants. Strong downward impulses are being replaced by longer but less powerful upward movements. In recent days, the selling forces have weakened somewhat and stronger and shorter bullish impulses are already appearing, which may indicate a gradual change in priorities from selling to buying, although the sellers have not yet completely switched to the buying side and the battle, as the monthly chart shows, is almost even. We will find out who wins later, but for now we will keep a close eye on the chart.