The USD/JPY appears to have run into a slight headwind in the short term on the daily chart, at the 96.60 area, with the pair having tested this price level on three occasions over the last 10 days, before pulling back.

The most recent of these was on Thursday last week, which saw the pair trade in an extremely narrow range, ending with a small doji candle, and subsequently topped off with an isolated pivot high at 96.61, following Friday’s close. This has duly been validated in the trading session so far today, with the pair pushing lower to test immediate support in the 94.00 region.

This has since held firm, suggesting that the current congestion at this level, is merely a pause, in the longer term bullish trend, with the pair currently moving higher to recover test the 95.00 price level at the time of writing.

Moving to our indicators, there is nothing to suggest on the daily volume chart, that there has been any sign of a selling climax. Volumes remain average, the only exception being the volume associated with the wide spread down candle of the 25th February, which failed to follow through to any sustained selling pressure. The daily heatmap remains firmly bullish, and with both the daily and the three day trend also bullish, the longer term outlook for the pair remains positive, with the BOJ no doubt thankful that perhaps the worst is over, for the time being at any rate.

In the medium term, the key levels are now firmly in place. Resistance is defined at the $96.60 area whilst support is in the $94.00 region. Whilst we may see an extended phase of sideways price action at this level, expect to see the pair move higher in due course, and provided the breakout is accompanied by rising and sustained volume, then three figures should be achieved in the next few weeks.

Anna Coulling is a trader with over 16 years experience and founder of AnnaCoulling.com