USD/JPY Weekly Price Forecast – Dollar Continues to Look Sluggish

The US dollar has gapped higher against the Japanese yen to kick off the week, and then went back and forth to form a bit of a harami on the weekly chart. Ultimately, this is a market that continues to see selling pressure in time we rally, and I think that the area between the ¥104 level and the ¥105 level will continue to offer selling opportunities. From a weekly standpoint, it is not until we break above the ¥105 level that I would take a move remotely seriously.

USD/JPY Video 28.12.20

All things being equal, you can see that there are a lot of wicks on candlesticks just above the ¥104 level, so that obviously has an influence on where we could go next, as it shows quite a bit of exhaustion just waiting to happen. The market has been grinding slowly to the downside, and at this point in time it looks like we are probably going to continue more of the same, but we are getting a bit stretched. Looking at this chart, I think that the market gets a bit of a bounce but then it should offer a nice opportunity if you are patient enough. The 50 week EMA above is at the ¥106 level, and racing towards the market pricing.

To the downside, I see the ¥102 level as a target, followed by the ¥101 level where we had bounced from rather significantly. All things being equal, the higher this pair rallies and shows signs of exhaustion, the more excited I get about shorting this pair. This will be especially true if the US Dollar Index breaks down below the 88 handle.

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