The US dollar initially tried to rally during the trading session on Wednesday but struggled and rolled over enough to form an exhaustive looking candle. We had a shooting star during the trading session on Tuesday as well, so this tells me that the market is really starting to struggle here. I fully anticipate that we will go looking towards the ¥180 level underneath, which is the bottom of the hammer from the Monday session. Once we break down below there, this pair could accelerate to the downside. At that point, I would be looking at a move down to the ¥107 level, possibly even the ¥106 level.
USD/JPY Video 10.01.19
The alternate scenario is of course that we break out to the upside which would be very strong now that we have formed a couple of exhaustive looking candles. If we break above the ¥109 level, then I think we go to the ¥110 level above which had previously been supportive. Even though we have bounced quite significantly from the bottom, it does look as if we are trying to fail here, especially considering that even though we have rallied as hard as we have, we have not wiped out the huge negative candle stick from the initial drop.
We have just had a “death cross” form in this pair, which of course is very negative as well. Because of this, I think that longer-term money is starting to jump into the Japanese yen and I do believe that eventually it will pick up quite a bit of value this year.
This article was originally posted on FX Empire
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