USD/JPY Price Forecast – Consolidation continues

The US dollar initially fell during trading on Wednesday but turned around of form a slightly supportive candle. However, we are in an area of consolidation that should continue to cause major headaches for traders.
Christopher Lewis
USD/JPY daily chart, February 28, 2019

The US dollar pulled back a bit during the trading session on Wednesday but turned around to rally. We bounced from the 50 day EMA, which of course is something worth paying attention to, but we did have an extraordinarily bearish candle on Tuesday. Beyond that, there is the 200 day EMA above, and that is of course a technical indicator that a lot of people pay attention to. With that in mind, it’s not surprising to think that the market will probably continue to bounce back and forth.

USD/JPY Video 28.02.19

When you look at this chart, it’s hard not to draw the parallel between here and the S&P 500. This is a great proxy for the S&P 500 as the two do tend to move in the same direction. At this point, the S&P 500 is struggling to get past significant resistance, so I think what you will see is one of these markets lead the other.

The area above is massive resistance also, starting at the ¥111.50 level. If we break down below the 50 day EMA, and by proxy the ¥110 level, then I think it’s very likely that we will start to sell off. The 61.8% Fibonacci retracement level is right in the middle of the recent consolidation. This of course is another thing to take into account, and quite frankly when a pair is “as clear as mud”, it’s probably best to simply walk away from it and look for other opportunities as there are most certainly going to be clearer set ups and other pairs.

Please let us know what you think in the comments below

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