The US dollar rallied a bit against the Japanese yen as we continue to see back and forth around the ¥107.50 level. At this point, the market is struggling to find any type of serious direction. Because of this, I think that we continue to dance around the same level.
If you wanted to know where money went to die, it has been this pair over the last couple of weeks. It seems as if every time we make a serious attempt to rally or break down, the market snaps right back to the ¥107 level as it has several times before. In other words, it is a great range bound trading market, but that is about it. With that in mind, I think that the market is respecting the 200 day EMA above, as well as the 50 day EMA which sits right in the middle of the candlestick.
USD/JPY Video 08.07.20
If we do break down below the lows of the last couple of trading sessions, we may go looking towards the ¥106 level where we have already formed a bit of a “double bottom.” That being said, if we were to break down below there it would be highly likely owed negative sign and it could unwind this entire market down to the ¥105 level, followed by the 100 to yen level.
To the upside, breaking above the 200 day EMA allows the market to go looking towards the ¥110 level, where we have seen a significant amount of pressure. All things being equal, this is a pair that typically moves on risk appetite but at the same time they are both a safety currency so that is something to pay attention to. Keep your position size relatively small and simply trade back and forth around the same range.
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This article was originally posted on FX Empire
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