The US dollar has rallied over the last several sessions, but the market has pulled back on Thursday as it reached the ¥110 level yet again. That’s an area that has been resistive more than once and it makes quite a bit of sense that we continue to see this area offer resistance. After all, the market has been bouncing around in a 1000 point range between the ¥105 level underneath, and the ¥115 level above. In other words, the ¥110 level is essentially “fair value”, and that means that the market will continue to be attracted to this area, and therefore there should be a massive amount of buying and selling at the same time.
USD/JPY Video 14.02.20
Looking at this chart, we could go as low as the 50 day EMA initially, and then possibly the uptrend line underneath that forms the bottom of the up trending channel. Both of those areas could offer a bit of buying opportunities, but one would have to assume that there is a lot of choppiness ahead of us. Otherwise, if we were to break above to a fresh, new high then the market could very well grind to the upside and go higher, but in a very slow and difficult manner. Quite frankly, if the USD/JPY pair does break to the upside, you may find easier trading in something along the lines of the NZD/JPY pair, or perhaps the GBP/JPY pair, assuming that it is a “risk on” move in not just simply US dollar strength across-the-board. At this point, the pair does look like it wants to break higher but it continues to be very difficult and needs to prove itself in one direction or another before trading it.
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This article was originally posted on FX Empire
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