Baxia Markets News

US Dollar Continues to Look for Higher Levels Against the Yen

Written by Baxia Markets | Jun 9, 2023 7:00:00 AM

In early Monday trading, the US dollar exhibited a strong rally against the Japanese yen, which has been experiencing a decline in value. However, traders have encountered some resistance around the ¥140 level, necessitating close attention. It is important to note that this level has been breached in the past, indicating that a breakout above the recent high is imminent. Such a breakout would likely propel the market to higher levels, with a potential target of ¥148 based on a previously identified ascending triangle on the chart.

 

While an immediate move to ¥148 is unlikely, it is advisable not to hastily enter the market. Nevertheless, we maintain a bullish outlook and firmly believe that it is only a matter of time before the broader market follows suit. However, it is crucial to consider the inherent volatility associated with this currency pair when establishing a position. Proper position sizing is of utmost importance, and clarity in the market will eventually emerge. Once a breakout above the recent high occurs, the next target is likely to be around ¥142.50.

 

USD/JPY traders waiting for a pullback

In the event of a market retracement, the top of the previous consolidation triangle can be found around the ¥138 level, which presents a potential area of value to closely monitor. While we do not anticipate a decline to that level, if it does occur, we would be particularly interested in observing any supportive candlestick patterns or signs of a possible bounce. Furthermore, the 50-Day Exponential Moving Average is approaching that area, adding further significance to its potential as a turning point. The convergence of these factors suggests that they may intersect in due course, although the question remains whether it will happen closer to the ¥138 level or at a later stage. If such a significant pullback occurs, it would certainly catch the trader’s attention.

 

In summary, the US dollar showed a strong rally against the Japanese yen in early Monday trading. The market faced resistance around the ¥140 level, requiring careful observation. A breakout above the recent high is expected, which could potentially drive the market towards ¥148 based on a previously identified ascending triangle. While an immediate move to ¥148 is unlikely, a bullish outlook remains. Traders should remain aware of the inherent volatility of this currency pair and exercise proper position sizing. The ¥138 level represents a potential area of value, but the timing of the market's convergence with that level remains uncertain.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. 

 

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