US dollar falls against Japanese yen for the weekThe US dollar fell during the week against the Japanese yen, as the ¥111 level has offered significant resistance. We have turned around rather drastically, testing the ¥109 level. When you look at these past two candles, you can make out a shooting star when you combine them. Otherwise, the other thing you should notice is that we have had a couple of shooting stars before then as well.
The US dollar of course has fallen against the Japanese yen during the week, forming what could be thought of as a “two-week shooting star.” There are couple of shooting stars before that as well, so I think what we are seeing is that the market is getting a bit exhausted. That doesn’t mean that I think that longer-term traders should be selling this market, rather that they may get some type of pullback that they can take advantage of based upon value. I think that if we move towards ¥107.50 level, there will be value hunters coming back into the marketplace trying to take advantage of this. There is also an uptrend line underneath that could come into play as well.
While the obvious question is “Why don’t I just short this pair?”, The reality is there is a lot of noise underneath that could make that trade very difficult. Beyond that, the interest rate expectations of both economies work against that, and if we continue to see a bearish pressure it will probably be a result of negative stock market moves or perhaps some type of geopolitical concern. The most likely of all scenarios is a simple and gentle move lower based upon exhaustion as we had seen far too many green candles on the weekly chart in a row.