Something is setting up on USDJPY, I'm just not sure what.

USDJPY has been in decline again the Yen since last weeks CPI release. The thing I find most interesting though is the rate of the fall. The left hand chart shows the expected daily range (ExMo) for the pair, with price moving further than expectation in the last 4 sessions.

Yesterday we dropped double ExMo by 9:30am! With price sitting on the low for the rest of the session.

The issue right now is I'm not sure if the opportunity is in a reversion to the upside, or if we should fade any pops?

Let me know your thoughts, and I'll continue to update this idea as we go.

Comment:

Looking back over recent price action, from July 6th-13th we had a similar rate of fall, with price down nearly 5% over 6 bearish sessions. This was followed by 3/4 days of consolidation on the low before price started a pretty strong uptrend back towards 150.

For right now this is my preferred scenario, giving price more room to fall and waiting for a clear signal that the bleeding has stopped short term before looking long.

This idea would also give us the possibility to then flip back short if the up move is just a relief rally ahead of further downside.