The Australian dollar plunged against the Japanese yen to kick off the trading session on Friday, breaking below the 114-yen level and even managed to break down below the 113-yen level.
The 50-day EMA being broken to the downside opens up the possibility of further correction, but really at this point in time, I think what you have is potential for buying value on these dips.
This dip and then a bounce is what I'm hoping to get involved in in order to take advantage of some type of sell-off in this market. The interest rate differential of course continues to favor the Australian dollar against the Japanese yen, and I do plan on taking advantage of that given enough time. That being said, it is probably prudent to stand on the sidelines for a minute while the market sorts itself out.
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Market Support Levels and Bullish Outlook
Despite the fact that we have seen such selling pressure, the reality is that we have been bullish for quite some time and of course the Bank of Japan is in a situation where it simply cannot tighten monetary policy. With that being said, I am bullish.
I do recognize that a little bit of patience probably goes a long way here, and therefore I'll be watching on Monday to see that if we continue to fall from here, do we see a turnaround and a rally? With that, I'd be more than willing to get involved, but I want to be on the right-hand side of the V.
If we break down below the 112-yen level, then we may go as low as 110 yen, which is also a place that I'd be very interested in, as it's proven itself to be important a couple of times this year already. I have no interest in shorting this pair anytime soon.
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