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Christopher Lewis
USD/JPY daily chart, August 23, 2019

The US dollar initially dipped lower during the trading session on Thursday but then turned around to show signs of strength. Ultimately, the ¥107 level has been resistance more than once, and it makes sense that we will continue to see the market struggle with this area. Beyond that, we also have the 50 day EMA just above there and is drifting lower. Ultimately, I think it’s only a matter of time before sellers come back in, unless of course we get a massive shot higher in risk appetite overall, perhaps represented by the S&P 500 which is one of my favorite secondary indicators for this pair.

USD/JPY Video 23.08.19

To the downside, there is an obvious support level near the ¥105 level, so I think it’s probably going to be likely that any move towards that area will struggle to break down. The question now is whether or not we can break down below the ¥105 level for the longer-term move, because it is essentially the 100% Fibonacci retracement level. If we can break down through that level, then it’s very likely that we go down to the ¥102.50 level and then eventually the ¥100 level which a lot of pundits are calling for by the end of the year. Ultimately, fading rallies will probably work even if we do get a breakout, as the massive break down candlestick that led to this recent selloff is rather nasty, starting at the ¥108.50 level.

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