The USD/JPY pair initially tried to rally during the day on Tuesday but found significant resistance at the 50 exponential moving average in the hourly timeframe. We rolled over to test the 110 level, which is massively supportive and of course important from a psychological standpoint, so having said that I think that the market would continue to be very interested in this area, and the fact that we ended up forming a hammer on the hourly chart and then rallying tells me that we should continue to see plenty of interest in this pair. I believe that the market is oversold, and I believe that there is going to be a significant defense of the 110 handle. With this being the case, I believe that we are starting to see a turnaround, and if we can break above the 110.60 level, buyers should continue to push this market to the upside.
Buying short-term pullbacks and in small increments
I believe that we could be buying short-term pullbacks and in small increments going forward, but you will have to be patient to wait for the market to reach to higher levels. If we break down below the 110 level on a daily close, then I think we go looking for support at the 109 level. This pair is oversold by almost every metric I measure it on, so I am mildly bullish, lease for the short term.
Written by FX Empire