USD/JPY Price Forecast – the US dollar breaks down against yen

The US dollar fell significantly against the Japanese yen during trading on Friday, breaking the back of a hammer from Thursday, but quite frankly there’s so much support underneath it’s very difficult to think that the market has suddenly changed its attitude for the long term. This is an algorithmic driven market lately, reading the latest Twitter headlines and reacting before thinking.

USD/JPY Video 19.11.18

The uptrend line that sits underneath is slicing through the ¥112 level, which is also supported. Beyond that, the 200 day EMA offer support so I think at this point this pullback is probably going to be short-lived. Market participants continue to think that global growth could be in trouble, but at the same time the longer-term outlook for the Federal Reserve is much more bullish and hawkish than any other central bank around the world.

However, the ¥114.50 level above has been massive resistance, so I think pulling back to find more buyers makes a lot of sense. It’s going to take a certain amount of momentum to finally smasher that level. However, if we break down below the 200 day EMA, that could send this market much lower, perhaps reaching down towards the ¥110 level, perhaps down to the ¥108 level. Ultimately, this is a market that worries about a lot of global situations, not the least of which is a global trade war.

At this point, I’m waiting for some type of supportive bounce or something to that effect is needed to get involved and start taking advantage of some value.