Potential signal:
- if we can get a daily close above the ¥145.40 level, then I’m looking to start buying, with a stop loss at ¥144.
The US dollar rallied a bit during the early hours on Monday as we continue to see a lot of volatility around the world.
That being said, it looks like the US dollar continues to see a lot of resistance near the ¥145 level, which is a large, round, psychologically significant figure, and an area where a lot of people will be looking for potential short positions, as it has been so reliable over the last several weeks.
That being said, it doesn’t mean we have to stay underneath that level, and if we do break above there on a daily close, it could open up more rallying.
Underneath, we have the ¥142 level, which has been significant support for a couple of months now. It is an area that has been important multiple times, and I think is a bit of a “floor in the market” currently. Whether or not that holds remains to be seen, but I do think there is a real possibility that we see it do exactly that. After all, it has had been very important more than once, so as long as we can stay above there, I would have to assume that this pair continues to find plenty of buyers.
A Potential Break Out
If we do break out from here, I’d be watching the ¥146 level. If we can break above that level, then I think you could start to see this market really take off to the upside. I’m not necessarily expecting that to happen easily, but if we do get some good news out of the Middle East, or perhaps even trade disputes globally, then that might be reason enough for the Japanese yen to lose some strength as it is quite often thought of as a “safety currency.”
In the meantime, I would anticipate that this market just simply bounces around back and forth, trying to figure out where to go next. Short-term range bound trading probably remains the most likely of outcomes, so traders will be watching that on short-term chart.
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