The US dollar fell slightly at the beginning of the session on Thursday, but then turned around to show signs of resiliency yet again, much like we did on Wednesday. At this point, if we can break above the high of the Wednesday candlestick, I suspect that this pair will go looking to the 50-Day EMA above, closer to the ¥149 level. I think this does make a certain amount of sense, because quite frankly any talk of the Bank of Japan normalizing rates is complete nonsense. However, there is that narrative that gets its way into the marketplace occasionally, and that’s what we have seen yet again.
Looking at the chart, if we were to turn around and break down below the low of the candlestick on Wednesday, then it opens up a move down to the ¥145 level, an area that is a large, round, psychologically significant figure, and an area that previously has been important. However, if you do get paid to hang on to this pair and therefore I think a lot of people will continue to take advantage of that.
As I record this, certainly it looks like we are going to try to rally from the uptrend line, and I think it’s probably a scenario where we eventually not only reach the 50-Day EMA, but possibly the ¥149.80 level. That’s an area where we have seen a lot of noise and resistance previously, so if we were to break above there, that would be a very bullish turn of events indeed.
With this, I like the idea of buying this pair, as the swap get you paid at the end of every day, and of course the interest rates in America have fallen a bit too far in very short order. Whether or not this lasts for the longer-term move remains to be seen, but right now it certainly looks as if we are trying to fight and recover in this pair. This is a situation where we’ve had a nice pullback, and what is a very strong uptrend longer-term. Ultimately, I think you get a situation where the market will continue to be noisy but eventually buyers come back.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.