USD/JPY Price Forecast – Dollar Gaps Against Yen

The US dollar gapped higher to kick the week off on Monday, showing signs of strength against the Japanese yen yet again. Ultimately, this is a market that is trapped between two major moving averages.
Christopher Lewis
USD/JPY daily chart, November 05, 2019

The US dollar has gapped higher against the Japanese yen during the trading session on Monday, breaking towards the ¥108.50 level during early US trading. This is a currency pair that is highly sensitive to risk appetite, and of course the stock markets in general. Ultimately, this is a market that will go looking towards the 200 day EMA as we are sitting just above the 50 day EMA. Ultimately, the market continues to show signs of construction, and that of course shows that momentum will be building up for a larger move.

USD/JPY Video 05.11.19

When you look at the longer-term chart, it’s easy to see that the market has been forming some type of inverted head and shoulders, although it’s sloppy to say the least. A break above the 61.8% Fibonacci retracement level will also be a very bullish sign the traders will flock to and start throwing more money into the market as a result. This will probably coincide with a major “risk on move”, such as the S&P 500 breaking out to the upside. With that, I would anticipate a huge “risk on” move overall, and that will mean selling off the Japanese yen. If and when the market breaks above the ¥109.50 level, it’s very likely to go looking towards the 100% Fibonacci retracement level which is the ¥112 region.

The alternate scenario is that the market was to break down below the 50 day EMA, which is extensively the ¥108 level. A breakdown below there could send this market much lower, reaching down towards the ¥107 level. However, it certainly looks as if there is more upward pressure than down.

Please let us know what you think in the comments below

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