The US dollar has gone back and forth against the Japanese yen, showing signs of confusion at this point, as the market is dancing around the 200 day EMA and the 50 day EMA simultaneously. The moving averages of course will cause a lot of confusion as the markets look to them for guidance on longer-term charts. That being said, this is a market that is confused to say the least, so at this point I think it’s very difficult to make a position play based upon this chart right now, so I think it’s ultimately a chart that should be used as a secondary indicator for the strength or weakness of the Japanese yen. In other words, if we see this market break down, then I think what you might want to do is start looking towards trading the Japanese yen against other currencies.
USD/JPY Video 10.04.20
For example, if you see weakness in the Australian dollar, then you should be shorting the AUD/JPY pair if this chart is also falling. On the other hand, if the pair rallied significantly from here, it’s possible that the AUD/USD rising as well triangulate towards a long position in the AUD/JPY pair. In other words, this chart is essentially a tool at the moment, not necessarily a market that we should be looking to trade per se. The ¥111 level above is an area where I could find sellers, and therefore would be looking for short positions. On the other hand, the ¥105 level underneath should offer plenty of support. At that point I would be looking for buying opportunities.