The US dollar initially tried to rally during the trading session on Tuesday and then turned around to fall towards the ¥106 level. We have seen quite a bit of support in that area, and therefore we bounced about 50 pips later in the day. This is a market that I think will try to go looking towards the 50 day EMA above which is sitting right at the ¥107.50 level, an area that has been an extreme magnet for price. We simply continue to go back and forth, and therefore it is likely that we will continue to see a lot of volatility around that area.
This market has fallen quite a bit during the trading session, perhaps a bit too far. With that being said, the market then recovered quite a bit and it now looks as if we will probably try to recover towards the ¥107.50 level. If the market can break above there, then it is likely that the 200 day EMA will more than likely going to offer a lot of resistance. If we can break above that level, then the USD/JPY pair is likely to go looking towards the ¥110 level.
This is a market that I think is going to continue to be very noisy and it is likely that we are still essentially in a short-term trading type of environment, but we are most certainly closer to the bottom of the overall range, so it makes sense that the buyers will probably step in. Ultimately, the market has made a significant move to the downside, but you can see that we have failed. Having said that, if we were to break down below the ¥106 level, then we are going to go looking towards the ¥105 level. Breaking below that level opens up the trapdoor for much lower moves.
On the upside, we would need to break the ¥110 level to make a significant move, but at this point that is light-years away, so I am not looking for a trade right now. With this, I like the idea of buying but I am not looking for anything above the ¥107.50 level. Short-term trading is probably about as good as this gets so; I do not have any interest in trying to hang on for a bigger trade quite yet.