The US dollar has initially pulled back just a bit during Asian trading on Friday, but then turned around to reach to the upside. At this point time, the market is likely to continue to see this area as a region where we continue to bounce around, mainly due to the fact that the ¥115 level above continues to be massive resistance. If we can break above there, then the market is likely to become more of a “buy-and-hold” scenario. The market will more than likely continue to see this as a bullish flag, and of course the interest rate differential between the two economies will almost certainly have a major influence on where we go next.
USD/JPY Video 08.11.21
To the downside, the ¥112.50 level should continue to offer certain amount of support, and therefore I think this remains a bit of a “buy on the dips” type of situation. Ultimately, this is a market that I think continues to see an attempt to build up enough momentum to go higher, and like I said, I do believe that the ¥115 level is crucial.
To the downside, even if we break down below the 50 day EMA and the ¥112.50 level, I think it is likely that we go looking towards the ¥110 level underneath, which is the “floor in the market” as the 200 day EMA sits right there. Ultimately, I think that is going to continue to be a trend defining situation, meaning that if we were to break down below there then we could crash pretty hard. At this point though, it seems very unlikely it is going to happen anytime soon.
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This article was originally posted on FX Empire