The US dollar initially tried to rally during the week but found enough resistance near the ¥107 level to roll right back over and show signs of weakness. Ultimately, I think that this market will continue to be very soft and very negative, and I believe that the market will also offer plenty of selling opportunities every time we try to bounce as there are so many geopolitical and global concerns when it comes to growth. With that, people tend to flock toward the Japanese yen as it is a “safety currency” and use this pair as a proxy for risk appetite.
USD/JPY Video 12.08.19
Looking at this chart it makes sense that we would go to the ¥105 level underneath, which is a large, round, psychologically important figure, but also where the 100% Fibonacci retracement level currently sits. With all that being said, look for short-term rallies on either the four hour or the daily chart to take advantage of the weekly trend to the downside. If and when we can break down below the ¥105 level, it’s very likely that we will then start grinding towards the ¥102.50 level, and possibly even the 100 young level which would certainly get the attention of the Bank of Japan, and possibly trigger a bit of intervention. My favorite trade at this point is to simply fade rallies as they occur, and I do believe that they will from time to time as the stock markets continue to be very volatile to say the least. With all of that I remain bearish.
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This article was originally posted on FX Empire
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