The US dollar has pulled back a bit during the trading session on Tuesday, as we continue to see a lot of resistance near the ¥110 level. That’s an area that of course will attract a lot of attention, as it is a large, round, psychologically significant figure and an area where we have seen selling in the past. The question now is whether or not we break higher or lower? This next move could be crucial due to the fact that if we break higher and make a fresh new high, then it should continue the overall uptrend. However, if the market breaks down below the hammer from the trading session on Monday, then it could signify a “lower high.” That could lead to a little bit more significant trouble.
USD/JPY Video 12.02.20
To the downside though, there is a significant amount of support at the 50 day EMA and of course the uptrend line at the bottom of the overall uptrend channel. The uptrend channel of course offers quite a bit of support, and a breakdown below there could open up a move all the way back down to the ¥105 level. The reason I say that is that the longer-term charts suggest that ¥105 on the bottom is supported as well as the ¥115 level above being resistive. In other words, the ¥110 level is essentially “fair value” for the market in general. I anticipate that it will continue to be difficult to break above, lease for anything substantial but if it does, that would be a very bullish sign.
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This article was originally posted on FX Empire
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