Despite a 3 handle day and extreme volatility in USDJPY in the U.S. session, very little changed from a technical perspective for this pair. Price continued to close above the low of the highest closing candle on the daily chart which means direction on that chart remains higher. And while price posted a new 7 day low it failed to close below the November 1st low at approx. 97.80 to keep the 10-day pattern bullish. On the upside price put in a new 1-1/2 month high at 99.40 but rolled lower two hours later when it could not hold above 99.00. Rumors circulated that a very large buyer came into the market above 99.00 initially and then placed a sell stop below that level which was elected shortly afterwards. Regardless of what happened on the highs the currency powers-that-be were not quite ready for an upside break-out.

(click to enlarge)
Figure 1. Daily Yen Chart with RTT Ratio inset

The 5-day pattern did shift lower during the mid-morning U.S. session sell-off; however, given the 10 and 20-day patterns are still higher, intraday traders should still be focusing on buying dips and otherwise taking buy signals in this pair as long as price avoids closing below 97.80. Given the most significant of economic releases is tomorrow morning - the U.S. non-farm payroll number - and this market has already cleared out the stops on either side (up and down) it is likely best to sit tight until shortly after tomorrow's 8:30 AM EDT release.

One look at the daily chart in Figure 1 tells the story of a market that has been going nowhere but into an ever tighter pennant. The answer for us in which way to trade it is always the same: whichever direction the RTT Ratio tells us to.

To see Jay Norris highlight trade set-ups and signals in live markets go to: Live Market Analysis. Jay is the author of "The Secret to Trading: Risk Tolerance Threshold Theory".

Disclosure: I am long UUP. Trading involves risk of loss and is not suitable for all investors.

Themes: Daily Forex Market Report for 11/8/2013 Stocks: FXY