The US dollar rallied against the Japanese yen during the trading session on Tuesday, but found the 113.50 level to be too resistive to continue going higher. It looks as if we are going to roll over and go back towards the 113 handle, and perhaps even down to the 112 level. This is a market that continues to show a lot of volatility, but I believe in the support at the 112 level, so I think that this pullback will more than likely end up being a nice buying opportunity. However, if we can break down below the 112 level, the market then goes to the 110 level, and then the 108-level underneath. Alternately, if we can break above the 113.50 level, the market should then go back towards the 114.50 level. This is a market that I do believe breaks out to the upside over the longer term, but it’s going to take some building to do that.
Volatility remains high, but overall, I think that the market is consolidating in general, and that continues to be an opportunity to trade this market. And take advantage of the general range bound attitude that we have seen over the last several months. I think that small position sizing is probably the safest way to trade this market, but once we can break above the 115 handle, I will consider the consolidation area destroyed, and that it becomes more of a “buy-and-hold” scenario. Longer-term, I do think that happens and I have a target of 120 sometime in spring of 2018. Until then, I’m looking for a lot more in the way of volatility as the interest rate situation in the United States continues to be strengthening, but somewhat fluid. Keep in mind that this pair is somewhat risk sensitive as well.
Written by FX Empire