The US dollar rallied initially during the trading session on Monday but gave back the gains as there was a bit of a “risk off” situation. At this point, it looks likely that we could break down below the ¥113.50 level, and then go back towards the uptrend line. I’m not calling for some type of serious break down or anything like that, I just think that we are a little overextended in the short term, and there is major resistance above. Because of that, it’s likely that we need to pullback and collect buyers at lower levels.
USD/JPY Video 13.11.18
I think that the ¥114.50 level above is major resistance that extends to the ¥115 level. It’s not until we can break above the ¥115 level, then I think that we will continue to go much higher. There is a major trendline underneath that of course the 200 day EMA, both of which should attract a lot of buying pressure. But we need a reason to finally break out.
If we did break down below the lower barrier that I have marked on the chart, and other words the 200 day EMA or the ¥111.50 level, then this pair could unwind rather drastically. I suspect that would probably coincide with some type of major financial event, and quite frankly there are a lot of concerns out there so it wouldn’t necessarily surprise me. In short, I think that we will get a pullback, but it should lead to a buying opportunity at lower levels. Be cautious, the Americans weren’t even at work due to Veterans Day, so liquidity might have been a bit thin.