USD/JPY
The US dollar rallied during the trading session, reaching all the way to the ¥112 level. That’s an area that has been significant resistance in the past, and the market certainly found plenty of sellers in that region. By doing so, we turned around and broke down pretty significantly. The ¥111.50 level is support, so if we break down below there it’s likely that we could go down to the ¥111 level. Ultimately, this is a market that has been bouncing around but it does suddenly look a bit threatened. However, the same time we have the 50 day EMA just below and the 200 day EMA is just below there. With all of this, until we break above the recent high, we won’t have much in the way of clarity. While it will probably be easier on a break higher, there is potential for negativity. On a break to the upside there is a clear shot to the ¥113.50 level, as opposed to the downside which will be very choppy.
AUD/USD
The Australian dollar rallied significantly during the trading session on Friday, breaking above the top of the hammer from the Thursday session, and by breaking above there it looks very likely that we could go higher. That being the case, we reached towards the 0.7050 level, an area that is minor on the chart. The more important level is the 0.70 level, which extends down to the 0.68 level. Looking at this chart, I believe that we are at extreme lows and we continue to cycle through some type of bottoming pattern. If the US dollar does in fact strengthen, I would ignore this chart, and don’t get involved because of the potential support. However, if we break to the upside and we see US dollar weakness in general, this market should shoot towards the 0.72 handle above.
