The US dollar broke out and above the ¥110 level during the trading session on Monday, slicing through the 61.8% Fibonacci retracement level as well. However, we still have several hours to go in the US session, so we turned around a roll back below the 110 year level, that would be an extraordinarily negative sign, and then I think at that point the buying pressure will have finally abated completely. Overall, I believe that this move is going to be crucial, so waiting to see how it shakes out at the end of the daily candle stick is going to be crucial.
If we do continue to go higher, the 200 day EMA above, pictured in black, should be the next resistance barrier. Beyond that, the ¥111.50 level should also offer resistance, that extends to the ¥112 level. Overall, that would be an extraordinarily bullish sign though, because quite frankly we have busted through a lot of selling pressure. Otherwise, if we rollover and show signs of exhaustion at the ¥110 level, then I think the market probably will roll over completely, because it would have been such a huge repudiation of the rally. I believe that this market is going to be all over the place, so by all means be cautious about your position size. I think that’s the only thing you can count on: volatility.
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This article was originally posted on FX Empire
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