The USD/JPY pair fell during the session on Wednesday, showing the 120 level to be a bit too resistive. Because of this, it appears that the market is going to head back down towards the bottom of the consolidation area that we have been in for some time. Keep in mind that Friday is of course Nonfarm Payroll Numbers day, and as a result this pair will more than likely be somewhat quiet during the session today. After all, it does tend to be very sensitive to that particular announcement, and we are quite frankly just bouncing around in consolidation anyway. In other words, I do not anticipate any significant move during the session today, as most traders will be quite comfortable sitting on the sidelines.
I do recognize that the 118.50 level below is massively supportive, and I think the buyers will step back in and start going long in that general region. I think that the market will probably try to get down there today, but quite frankly this is a market that’s going to be difficult to trade unless you are looking for short-term moves. When I say short-term, I think in late 20 pips of the time.
It consolidates until it doesn’t
This may seem very basic, but quite frankly the thing about consolidation that gets people into trouble is that you can never really know when it’s going to end. Yes, the 118.50 level could get broken down below during the session today, but the best way to trade consolidation that I have found has been to simply trust that it will continue until proven otherwise. I think that’s the case here, and quite frankly I believe that the Bank of Japan will eventually add more liquidity to the marketplace, bring down the value of the Yen. When that happens, I would anticipate this market going higher.
Even if we broke down below the 118.50 level, I see so much noise between there and 116.50 that it’s difficult to imagine shorting. However, if we get a supportive candle in that area, buying would be very easy to do.
