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Christopher Lewis
USD/JPY daily chart, July 18, 2019

The US dollar initially pulled back during the trading session on Wednesday but then turned around to show signs of life again. By doing so, we formed a hammer. The hammer of course is a strong sign of support, and it looks as if we are ready to go higher, perhaps reaching towards the 50 day EMA which is pictured in red on the chart. Ultimately, if we can break above there the market should continue to build up momentum to the upside.

USD/JPY Video 18.07.19

Remember that this pair is highly sensitive to risk appetite so pay attention to stock markets around the world. As a general rule, if they rally sodas this pair. It’s not that the US dollar get stronger, it’s just that less people want to flee to the Japanese yen for safety. To the downside, I see a lot of support underneath at the ¥107.75 level. If we were to break down below that area, and perhaps even the ¥107.50 level, that would be very bad for this pair and send it looking towards the lows again.

I suspect that this pair is going to be very choppy over the next several sessions but it certainly looks as if we are trying to put some type of bottoming pattern and. By doing so, this could build a base for a much larger move but obviously this is more of a longer-term forecast at that point. Ultimately, I much more comfortable buying this pair at these low levels than selling it based upon recent action.

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