The US dollar has initially tried to rally a bit during the course of the trading session on Thursday but gave back the gains rather quickly to go reaching towards the ¥110 level. The market continues to look at the ¥110 level as an area of great interest, so it is worth paying close attention to this area. That being said, I think we probably are more likely than not to continue plowing lower, perhaps trying to take out the losses from the last couple of weeks. If that happens, then the market is likely to go looking towards the 200 day EMA underneath.
USD/JPY Video 23.07.21
If we do rally from here, there is definitely going to be a significant amount of resistance above though, between the ¥111 level and the ¥112 level. That being the case, the market is likely to see a bit of hesitation above there, and with that in mind that it goes back several months in years on the higher time frames. In other words, I do think that the upside is somewhat limited at the moment, and therefore you have to keep that in the back of your mind as well. If we were to break above the ¥112 level, then it could unleash a massive recovery.
That would probably be a multi-year rally, and therefore something that would probably be a longer-term position that you can build upon. That being said, we are not there yet so I believe that we are more likely than not to continue to grind lower to reach towards the 200 day EMA or so.
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This article was originally posted on FX Empire