The US dollar gapped lower against the Japanese yen as traders raced for caution and safety in the aftermath of those drone attacks. However, we have since spent the rest of the day trying to fill that gap so it looks as if the markets may be trying to calm down.
USD/JPY Video 17.09.19
With that being the case, the trade is probably going to set up as soon as that gap is filled. If the market rolls over from there then it means we have to go lower, perhaps down to the ¥107 level. Alternately, if we were to break above that gap, then the market is more than likely going to go looking towards the 200 day EMA which is what we were doing before the weekly open. This is a market that will course moved back and forth with risk appetite so pay attention to secondary indicators such as the S&P 500. If it rallies, typically this pair will as well.
One thing that I have observed during Asian and European trading is that it seems as if the markets are trying to stabilize. If that’s the case, we very well could get that break through to the upside. I do believe that the 200 day EMA will cause issues though and will more than likely offer a selling opportunity. To the downside I would expect the ¥107 level to be very supportive. I think the one thing you can count on is a lot of choppiness.
Please let us know what you think in the comments below
This article was originally posted on FX Empire
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