The US dollar has initially pulled back during the trading session on Friday, only to turn around and recover again. It’s a very tight range though, so that makes quite a bit of sense as the ¥110 level above is a massive resistance barrier. If we can break above there, then this pair will go much higher, reaching towards the ¥111 level, and then possibly even the 100% Fibonacci retracement level at the ¥112.50 level. Beyond that, we have recently seen the 50 day EMA break above the 200 day EMA, forming the so-called “golden cross.” This is a very bullish sign and does tend to attract a lot of attention in general.
USD/JPY Video 30.12.19
All things being equal though, I think that buying short-term dips will be a viable trading strategy, but it will be difficult to break this market to the upside as this is an area that has been so heavily defended. Beyond that, it’s the wrong time of year to expect a lot of volume, and I do suspect that it is going to take a significant amount of volume to break above that heavily defended ¥110 level. Remember that this pair is highly sensitive to risk appetite, so it is worth paying attention to. All things being equal, this is a market that is supported near the ¥108.50 level underneath, and therefore I think that the value hunters will continue to push this market to the upside but if we were to break down below the ¥108.50 level, it could end the bullish trend.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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