USD/JPY and AUD/USD Forecast - 18 January 2017

USD/JPY

The US dollar broke down during the day on Tuesday, slicing below the bottom of a hammer on Monday. By doing so, the market should have plenty of negative pressure, but I see quite a bit of supportive action just below, and especially at the 111.50 level underneath. If we get some type of supportive candle, I believe that it is time to start buying again. After all, this is a market that continues to show quite a bit of bullish pressure, and we were overextended to begin with. I’m waiting to see an opportunity to start buying, because quite frankly I have no interest in shorting this market. A supportive candle should send this market looking for the 118.50 level above, and then possibly the 120 handle after that.

USDJPY

AUD/USD

The Australian dollar broke above the 0.75 level, showing significant signs of strength. The bullish candle of course is a very strong sign, as we have cleared the psychologically important level. The strength of candle is strong, and of course we should keep in mind that the gold markets have shown real strength as well. We are overextended, so I think that a pullback is probably needed. If we can break above the top of the candle for the session on Tuesday, I think the market then goes to the 0.7650 handle. Nonetheless, I am a bit cautious when it comes in this market because we have gone straight up from the 0.7150 handle. This has been an extraordinarily strong move, so getting involved now would only be chasing the trade.

I think that ultimately the US dollar will continue to strengthen, so I am a bit cautious when it comes to the Aussie and I believe a lot of the movement will probably have more to do with the gold market than anything else. Pay attention to that, it will give us clues as to where we’re going next.

AUDUSD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.