- The USD/JPY has bounced a bit against the Japanese yen during the trading session on Wednesday, as we have seen a certain amount of continuation of the overall trend.
- Looking at this chart, you can see that the 50-Day EMA sits just below the ¥145 level, an area that I thought could be important anyway.
- Because of this, it’s likely that we could head back to the top of the range that we have been in, meaning that it’s very likely that we will see a target of ¥150.
If we break down below the bottom of the 50-day EMA, it’s also possible that we could go down to the uptrend line. The uptrend line of course is an area that a lot of people would be paying close attention to, but what I do believe has happened for the session on Wednesday is that people are starting to try to get ahead of the idea of the CPI figures coming out on Thursday. After all, the CPI numbers will give us a bit of a heads up as to whether the Federal Reserve is going to continue to tighten.
Avoid Shorting this Market
When I look at this chart, I can see that the market has struggled a little bit over the last couple weeks, but we are still very much in a consolidation zone. I do think that eventually we break out to the outside and continue to go much higher, breaking out above the ¥150 level and looking to the ¥152 level. Keep in mind that the Bank of Japan is the only reason this market has pulled back at all, and of course profit-taking is also the biggest culprit. Remember, the Bank of Japan has intervened in the market a couple of times, but at best they will only be able to slow down the massive shot higher.
Until we break down below the uptrend line, I don’t see any reason to short this market, and even then I would not be interested until the Bank of Japan or the Federal Reserve changed its overall attitude about its monetary policy. I do anticipate that there should be a lot of choppy behavior, and that would almost certainly be the case on Thursday as that CPI announcement will have everybody placing money in different directions.
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