- The US dollar has rallied a bit against the Japanese yen during the trading session here on Thursday as we have broken above the 50 day EMA.
- The market is currently between the 200 day EMA and the 50 day EMA indicators. And it is in the middle of a consolidation area that has been very well defined.
- With the 146 yen level offering support and the 149 level above offering resistance, this is a market that I think continues to see a lot of back and forth.
But keep in mind that we have the Bank of Japan meeting early on Friday, so pretty much anything's possible. I believe at this point in time, this is a market that stays in this range, but you never know, the Japanese could do or say something that rattles the markets.
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If We Break Out
If we can break above the 149 yen level, then the implied move is to the 152 yen level. But I do think that the 151 yen level probably offers a little bit of resistance as well based upon that huge wipeout candle that got us down into this range to begin with.
If we were to break down below the bottom of the hammer from the session on Wednesday, that would be an extraordinarily negative turn of events probably opening up a move to the 144 yen level. Ultimately though, you get paid to hang on to this pair to the upside, even though the FOMC cut rates. And that of course is something that people will have to keep in mind.
A lot of people are attracted to an investment opportunity. So, with all of that being said, I still lean to the upside here, but I recognize the next 24 hours probably are going to be noisy.
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