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Christopher Lewis
USD/JPY daily chart, December 04, 2018

The US dollar has gapped higher against the Japanese yen in reaction to the US/Chinese moratorium on new tariffs, as you would expect. After all, this pair is somewhat sensitive to risk appetite, but I also recognize that there is a lot of resistance above at the ¥114.50 level, extending to the ¥115 level. In general, I still believe that the longer-term uptrend is in effect, because we have the ¥112 level underneath offering massive support, along with the 200 day EMA and the uptrend line on the chart. In other words, I think that we may get the occasional pullback but I also recognize that it is probably going to attract more buyers, especially if we get some type of “Santa Claus rally” in other markets such as the S&P 500.

USD/JPY Video 04.12.18

If we did break down below the uptrend line, the 200 day EMA, and of course the support level that I mentioned at the ¥112 level, then it’s a major change in attitude of the market and we could go much lower. At this point in time, I don’t think that’s going to happen though, but if we got some type of super negative news out there involving the Americans and Chinese, that could be the catalyst for that breakdown. I suspect that the next several sessions will be a lot of back and forth, but I do prefer buying the dips for short gains. A break out is going to take a lot of effort, so I believe that we will be scalping more than anything else here.

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