The US dollar has initially gapped lower to kick off the week after traders finally got an opportunity to react to further trade tariffs by the Americans against the Chinese. Having said that, we turned around to show signs of life again and reached towards the ¥106.70 level, before rolling over again. In other words, we have reentered the consolidation area that we had been in previously.
A couple of things to note here is that the ¥107 level has offered resistance, and not just once but several times. The 50 day EMA is starting to reach towards that area, so at this point signs of exhaustion closer to that handle our selling opportunities. We are well below the 61.8% Fibonacci retracement level, and that typically means that you go looking towards the 100% Fibonacci retracement level. (We have in fact already done so.) So the question now is can we continue to go lower? If we do break down below the bottom of the candle stick for the trading session, that opens the door to the ¥102.50 level. Below there, then we start looking towards the ¥100 level.
In the meantime, I believe that we are simply going to bounce around between the ¥105 level underneath, and the ¥107 level above. This is a market that reacts a lot to risk appetite, which is all over the place with Donald Trump, the Chinese, recessionary headwinds in Germany, stock markets teetering, and of course is a massive bond bubble all at the same time. With that being the case it’s very difficult to imagine that this market is going to have a lot of conviction to the upside, but obviously it has a ton of support underneath. Short-term range bound trading probably continues in the short term using these two levels.
A couple of things to note here is that the ¥107 level has offered resistance, and not just once but several times. The 50 day EMA is starting to reach towards that area, so at this point signs of exhaustion closer to that handle our selling opportunities. We are well below the 61.8% Fibonacci retracement level, and that typically means that you go looking towards the 100% Fibonacci retracement level. (We have in fact already done so.) So the question now is can we continue to go lower? If we do break down below the bottom of the candle stick for the trading session, that opens the door to the ¥102.50 level. Below there, then we start looking towards the ¥100 level.
In the meantime, I believe that we are simply going to bounce around between the ¥105 level underneath, and the ¥107 level above. This is a market that reacts a lot to risk appetite, which is all over the place with Donald Trump, the Chinese, recessionary headwinds in Germany, stock markets teetering, and of course is a massive bond bubble all at the same time. With that being the case it’s very difficult to imagine that this market is going to have a lot of conviction to the upside, but obviously it has a ton of support underneath. Short-term range bound trading probably continues in the short term using these two levels.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.