The US dollar initially fell against the Japanese yen during the trading session on Wednesday but then turned around to show signs of strength yet again.
After all it does make a certain amount of sense that the overall trend remains the same as it has been for a while and I think it also makes a certain amount of sense that simple momentum just gets you to the upside.
If traders are going to continue to look at this as an interest rate play, then I think holding to the long side makes the most sense. The 50-day EMA sits just above the 158-yen level and of course the 158-yen level has been very important in both a support and resistance stance when it comes to this pair.
A Potential Bullish Move
If we can stay above there then it is likely that we can continue to see the USD/JPY market open up a potential bullish move towards the crucial 160-yen level but keep in mind that the 160-yen level is basically where the Bank of Japan decided it was time to intervene. It's not necessarily that they will again it's just that they could.
Top Regulated Brokers
Because of this I am somewhat cautious and getting overly aggressive but buying dips and simply waiting for value to present itself in that dip makes quite a bit of sense. If we were to break down below the 158-yen level, then it could open up a drop down to the 157-yen level.
But with that being the case I think that would probably only invite more buying. The 156-yen level is backed up by the 200-day EMA. I think that is the bottom of this trend. I think you will continue to see this market look bullish. But if we did break down below the 200-day EMA I obviously would have to.
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