The US dollar initially plunged on Thursday against the Japanese yen but has turned things around as the momentum continues to threaten the massive barrier above.
The US dollar initially plunged against the Japanese yen only to turn around and show signs of strength. By doing so, if the market were to break above the 158-yen level, the barrier just above, it has 200 pips to chew through before it makes a significant move, unless there is some type of external shock.
Keep in mind that if we clear the 160-yen level, it is potentially a massive long-term move as we would be breaking through resistance all the way back from 1990, something that will rattle the markets. In that environment, I have a projected move to 250. That is why it is so important to get through that area for the dollar.
Anticipating Choppiness and Support Levels
In the meantime, I would anticipate a lot of choppiness, a lot of pullbacks, but those pullbacks continue to get bought into as the Bank of Japan is stuck with its interest rate policy and the fact that the demographic is a major problem for Japan long-term. With this, the massive debt, they just are stuck.
I believe that any time this market pulls back you have to look at it as a potential buying opportunity like we saw, but I am also looking at the 156 yen level underneath as potential support right along with the 50-day EMA and then underneath there, you would have the 154-yen level.
Top Regulated Brokers
I think eventually we do break out above that aforementioned 160-yen level, but it is going to be a massive effort that is going to be necessary to get through there. In the meantime, you are looking at a short-term buy on the dip scenario followed by a long-term buy and hold.
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