Christopher Lewis
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The US dollar initially tried to rally during the trading session on Tuesday as we are testing the ¥109 level, only to see the market fall towards the 50 day EMA which should in theory be support. All things being equal, this is a market that I think continues to see buyers on dips, but if we break down below this hammers near the ¥108 level, that could open up massive selling. The US dollar of course is getting hammered against most currencies, but the Japanese yen has really been hit hard by almost everything it is traded against.

USD/JPY Video 12.05.21

If we were to break down below this hammers near the 38.2% Fibonacci retracement level, then we will more than likely go looking towards the 200 day EMA. At this point, it sits just below the ¥107 level, and therefore I think that is going to offer a little bit of a guide for trend traders. Longer-term, I think that we will probably try to test the highs again, but we need to see some type of bounce in order to get long. At this point I am on the sidelines and simply waiting to see what happens next but if I were to want to short the Japanese yen, I will continue to do it against the Swiss franc or British pound as I have positions in both of those markets.

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As far as this market is concerned, it is essentially a fight between two of the week as currencies out there which tends to make for a miserable trading environment. Nonetheless, if I get a signal, I will jump and keep you updated here at FX Empire.

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