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USD/JPY Price Forecast – US dollar fills gap

The US dollar fell initially during trading on Wednesday, finally filling the gap that we had seen from earlier in the week. By doing so, we have now taken care of some technical housekeeping, and can start to move again.
Christopher Lewis
USD/JPY daily chart, June 13, 2019

The US dollar fell significantly to kick off the trading session on Wednesday, filling the gap that had been leftover. By doing so, it looks as if the market is trying to build up a bit of support underneath, as the gap would suggest. The previous two candles were shooting stars, and therefore I think there is a lot of noise in this area. The question now is if we are forming a bearish flag, or we are forming some type of base?

USD/JPY Video 13.06.19

The answer to this will probably be seen in the S&P 500 as the two markets do tend to move in congruence at times. Remember, this is a risk appetite scenario, so at rallies if markets are doing well, just as it falls it market struggle. Currently, I believe that the “floor” is the 61.8% Fibonacci retracement level, so if we break down below there the market probably unwinds rather significantly, perhaps even as low as ¥105 level.

On the other hand, if we break above the highs from the Tuesday session I think that the market goes looking towards the top of the massive break down candle from a couple of weeks ago, meaning that we should reach towards the ¥109.70 level. That probably coincides nicely with the S&P 500 rallying, or at least some type of “risk on” event. With that being the case, this is a market that has seen a lot of interest in this area previously, so I still believe there’s a good chance we rally from here.

Please let us know what you think in the comments below

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