The US dollar has pulled back a bit during the trading session on Wednesday in order to reach towards the 200 day EMA. What is particularly interesting is that the 200 day EMA is starting to offer a bit of support. That’s a strong sign for the buyers if we can possibly make that breakout. The 200 day EMA of course is crucial, because it is a longer-term trend following type of indicator. If we continue to see the market stay above the 200 day EMA, is very likely that it is only a matter of time before we make the longer-term break out and go looking towards the 100% EMA which is closer to the ¥112 level.
USD/JPY Video 07.11.19
Don’t be wrong, the ¥110 level will of course offer significant resistance above, but breaking out from this point would suggest a rough “inverse head and shoulders”, which of course is a very bullish pattern as well. Ultimately, everything is lining up for a breakout, and with the “risk on” attitude that we have seen out of Wall Street, it would make sense that as the S&P 500 goes higher, the dollar/yen pair will continue to see a lot of volatility, but should be rather positive in general. The 50 day EMA is underneath and offering massive support at the ¥108 level, so I suspect that will be the “floor” in the market. Expect choppy behavior, but it certainly looks as if the pressure is building up underneath and will eventually overwhelm the market.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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