The US dollar initially tried to rally during the trading week, and even broke above the ¥110 level at one point. By doing so, we had shown real resiliency, but we also have seen a lot of resistance at the top of the nasty hammer that was part of the flash crash. Because of this, and the fact that the 61.8% Fibonacci retracement level sits just above, I think it is very likely that we continue to see a lot of hesitation in this area. Looking at the daily chart, you can see a lot of indecision and I think that’s the biggest problem with this pair right now.
USD/JPY Video 11.02.19
Looking at the chart, I think we are in for a tough couple of weeks, and a longer-term trader will probably be better served by drilling down to the daily charts to see some type of impulsive candle. If we rally, I suspect that the next major resistance level is near the ¥112 level. Otherwise, if we break down from here I think we will probably go looking towards the ¥108 level which is massive supportive. I am getting conflicting signals based upon different time frames, which typically means we are building up for a massive move. That being said, it is probably best for the longer-term trader to simply avoid this pair as there are much easier trades to take out there. The risk to reward in this market simply isn’t going to be there quite yet.
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This article was originally posted on FX Empire
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