The US dollar has gone back and forth against the Japanese yen during the trading session on Monday, sitting just below the ¥104 level. The ¥104 level is of course a large, round, psychologically significant figure, and therefore a lot of people will be paying close attention to it. Furthermore, it has offered a significant amount of resistance as of late so “market memory” comes into play. Ultimately, we are in a downtrend and it looks to me like we are getting a little bit stretched to continue to think of this as a potential bullish flag. At this point, it is turning to look more and more like a descending channel.
USD/JPY Video 26.01.21
Given enough time, I believe that this market will make a bigger move but in the short term it looks very likely to be choppy and sideways with a slightly downward tilt like we have seen of the last couple of weeks. The US dollar course continues to suffer at the hands of stimulus, but at the same time the Japanese yen is considered to be a safety currency, so it is a bit of a “one-two punch” considering all of the questions out there when it comes to the global economy. Given enough time, I do think that we reach towards the recent low which is closer to the ¥102.50 level.
However, you are going to need to be very patient on any type of shorting opportunity if you wish to hold onto a move down to that level. As far as buying is concerned, I am not even thinking about it until we break the ¥105 level.
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