USD/JPY Weekly Price Forecast – dollar rallies towards ¥113, but then rolls over

The US dollar rallied quite a bit during the week, reaching towards the ¥113 level before rolling over. The market found a significant amount of supply in that area, as was seen at the beginning of the year. I believe that the market needed to pull back anyway, it had gotten ahead of itself.
Christopher Lewis
USD/JPY weekly chart, July 23, 2018

The US dollar has enjoyed a nice run higher against the Japanese yen during most of the year. However, we ran into a major resistance barrier in the form of the ¥113 level, which I believe extends to the ¥115 level. I do believe we eventually go higher but being a bit overextended means that we needed to pull back to find enough value hunting to turn this market around. I think that somewhere near the ¥111 level we will find more buyers, and I would fully anticipate value hunters to come back in.

The alternate scenario is that we break above the top of the candle for the week, and that I think we continue to grind towards the ¥114.50 level, and then the ¥115 level. It’s going to take a lot of work to get up there though, and therefore I think it will take a lot of patience. However, the interest rate differential between the two economies is very clear-cut, as the Federal Reserve looks to continue to raise interest rates, despite what Donald Trump said on Friday, and therefore I think that once the smoke clears traders will be looking to pick up the value that is presenting itself as I watch this market on Friday. I think that the Bank of Japan is several years away from trying to normalize rates, so there’s no need to panic, simply look for value, a bounce, and then take advantage of it.

USD/JPY Video 23.07.18

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