Pull Back Imminent for USD/JPY

The US dollar has rallied significantly during the course of the trading session on Wednesday but has given back quite a bit of the gain to show signs of hesitation. Quite frankly, this is something that we have needed to see for a while, as it seems like the pullback was never coming. Ultimately, this is a market that although bullish, cannot go straight up in the air forever. Because of this, I would anticipate that we get some type of pullback to bring balance back into the market. But frankly, the market has gotten so overdone that the snapback could be rather vicious.

USD/JPY Video 24.03.22

On the other hand, if we were to break above the highs of the trading session on Wednesday, we could see the market enter an even more parabolic situation. Ultimately, this is a market that I think continues to see a lot of volatility and noisy behavior because of the one-way trade. I think that given enough time, we will probably go looking towards the ¥119 level underneath, which is where we launched the other day.

Ultimately, this is a market that I think needs to find some type of balance, but clearly, we do not have that at the moment. Because of this, it is very likely that we should see a bit of a pullback over the next couple of days. I believe that pulling back 50% could be possible as well, but we will have to see whether or not we are going to finally acknowledge the idea of gravity. Expect a lot of noisy behavior, but I think that we are about to see a lot of profit-taking.

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