The US dollar has done very little during Christmas Eve as one would expect, and during the holidays it is facing a major resistance barrier in the form of the ¥110 level. This is an area that should continue to cause some issues, but if we can get broken it will allow the market to go much higher, perhaps to the 100% Fibonacci retracement level which is closer to the ¥112.50 level. Having said that, we have been consolidating in this area for some time, extending down to the ¥108.50 level.
USD/JPY Video 26.12.19
The 50 day EMA has broken above the 200 day EMA, forming the “golden cross”, something that larger and longer-term traders will pay attention to. All things being equal though, this is about risk appetite and whether or not the Japanese yen will be bought as a safety currency. All things being equal, I do believe that this market will continue to go higher, but we may need to pullback in a little bit. Those pullbacks should be thought of as buying opportunities as long as we can stay above the ¥108 level. If we break that level, then the uptrend is done.
On the other hand, if we can break that ¥110 level which should break the backs of the short term sellers at the 61.8% Fibonacci retracement level will have been destroyed. At that point, experience has taught me that the 100% Fibonacci retracement level is a reasonable target.
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This article was originally posted on FX Empire
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