The US dollar has found significant support at the ¥109 level, bouncing all the way back to the ¥107.70 level, an area that I had marked as resistance. Because we have stayed within this range, it’s likely that we are trying to make a little bit longer term decision. If that’s going to be the case, we will continue to see a lot of choppiness until we can break out of this 70 PIP range. Once we do, it’s very likely that the market participants will send this market aggressively in one direction or the other.
USD/JPY Video 15.05.19
If we break down below the ¥109 level, it more than likely opens up the door to the ¥108 level, more than likely accompanied by some type of stock markets selloff. Looking at the chart, if we can break above the ¥109.70 level, it’s likely that we will go to the ¥110 level, and then possibly the ¥111 level to fill the gap that currently resides there.
Overall though, I believe this is going to move right along with the US stock markets, so if we get a meltdown in the stock market it’s very likely that we see more safety trading heading towards the Japanese yen. However, if we can recover a bit in the stock markets, it’s likely that we will see that run to the ¥111 level be attempted. Remember, gaps do get filled eventually, but that doesn’t mean it has to be right now, so caution will be needed.
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This article was originally posted on FX Empire
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