The US dollar formed an engulfing candlestick, which of course is a very bullish sign. However, the pair is testing the ¥110 level, an area that has been massive resistance. If we were to break above there it would send this market much higher, perhaps reaching as high as ¥112.50. Keep in mind that this pair is highly sensitive to risk appetite, so pay attention now stock markets are behaving simultaneously. With that in mind, longer-term traders may be looking for that breakout and if and when we get it, will certainly be interested in getting involved.
USD/JPY Video 13.01.20
To the downside, the bottom of the weekly candlestick being broken would be a very negative sign and could send this market down to the ¥105 level given enough time. That being said, the market is very likely to move based upon the overall attitude of traders, especially when it comes to things such as the US/China trade situation. That deal being signed next week could kick this off, but quite frankly the most important thing to pay attention to is the idea that traders are coming back into the markets from the holiday, and the volume will pick up. I suspect that this weekly candle will decide what happens next. In the meantime, be patient but recognize that a move above the ¥110 level is an extraordinarily bullish sign. The breaking below the weekly low would send this market much lower. We should get some answers rather soon, but you may have an easier time chasing the signal off of the daily chart than the weekly.
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This article was originally posted on FX Empire
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