USD/JPY Weekly Price Forecast – US Dollar Pulls Back to SupportThe US dollar has pulled back significantly during the course of the week but has also found the ¥109 level to be supportive.
The US dollar has fallen significantly during the week to reach down towards the ¥109 level. That is an area that suggests support, and we have in fact seen it happen. The Friday session was very bullish, but at this point in time I think we are still prone to see a lot of choppiness. This does not necessarily mean that it cannot be traded, just that I would anticipate a lot of noise in the short term.
USD/JPY Video 12.04.21
If we were to break down below the ¥109 level, then it opens up a move towards the 200 week EMA at the ¥108 level. To the upside, the ¥111 level is resistance, but then possibly ¥112 would also be the same. Ultimately, this is a market that has gotten far ahead of itself so I think what we are looking at here is a market that may have to kick off a little bit of consolidation more than anything else.
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The market has gotten so far ahead of itself that at the very least we need to work off the froth, as the market had been straight up in the air. To the upside, if we were to break above the ¥112 level, then it is likely that this pair goes much higher. That being said, this is a market that simply cannot be shorted, at least not anytime soon. Because of this, I would not be a longer-term trader at this point, but I also recognize that if we get a significant pullback and a bounce, that might be a nice buying opportunity to take advantage of. Ultimately, this is a market that is one that you are going to have to be cautious with.
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