The US dollar attempted to rally against the Japanese yen on Tuesday but ultimately showed signs of hesitation at the key resistance level of ¥138.50. This level represents the top of the ascending triangle, and if the market can break above it, we could see a strong uptrend for the US dollar against the yen. However, with the Federal Reserve meeting scheduled for Wednesday, there is a level of uncertainty surrounding the market, which could lead to a volatile few days for traders.
While the market has been showing signs of volatility, a pullback could be an opportunity for buyers, making the market more attractive. Traders should be cautious about position sizing and look for opportunities near the ¥135 level, which could present a buying opportunity in a pullback scenario. The Bank of Japan continues to work against higher interest rates, and therefore is hamstringing the yen.
On the other hand, if the market takes off to the upside, we could see a move toward the ¥140 level, a key psychological resistance level that has seen significant market action in the past. Despite the noise and volatility surrounding the market in the coming days, the market appears to be building pressure to the upside, indicating that there could be a significant move in the works.
Avoid Shorting the Pair
- It's worth noting that shorting the pair does not seem to be a viable option soon.
- The market is showing signs of resistance and seems to be building momentum towards an uptrend, rather than a downtrend.
- In this scenario, a pullback could provide traders with a buying opportunity, allowing them to take advantage of the potential upswing in the market.
- After all, this is a market that has shown a lot of resilience in the face of any selling that happens.
TLDR; the US dollar has shown signs of hesitation against the Japanese yen at a crucial resistance level. While the upcoming Federal Reserve meeting could lead to further uncertainty, the market appears to be building pressure to the upside, indicating the potential for a significant move. Traders should be cautious and patient, waiting for a pullback to present a buying opportunity near the ¥135 level. With careful position sizing and a watchful eye on the market, traders can potentially navigate the volatility and make informed decisions based on the information available.
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