The US dollar broke higher during the trading session on Tuesday, breaking above the top of the inverted hammer that forms for the Monday session. By doing so, it shows signs of strength and we could very well see this market climb from here to reach towards the 108.50 level. That’s an area that has seen some action as of late and the 50 day EMA is starting to reach towards it. Because of this, I think this is a short-term rally that is simply more of a grind back and forth.
USD/JPY Video 17.07.19
The market is very sensitive to risk appetite, so keep that in mind. The S&P 500 of course is a great barometer of risk appetite and the two markets do tend to move in the same direction during the day. However, if we can break above the 108.75 level, then we go to the 109.75 level after that. To the downside, if we were to break down below the 61.8% Fibonacci retracement level we could then go towards the 107.00 level after that. Overall though, I think what we are going to see is more of a back-and-forth type of market, perhaps trying to build up enough momentum to go in one direction or the other. This does look like a bottoming pattern in general, but obviously we can’t confirm that until we break out to the upside, something that doesn’t seem likely to happen in the short term as market simply have nowhere to be as we are in the dead of summer right now.
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This article was originally posted on FX Empire
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