USD/JPY Forecast May 19, 2017, Technical Analysis

USD/JPY daily chart, May 19, 2017

The USD/JPY pair had a very volatile session on Tuesday, as one would expect. After all, the Wednesday session was brutal, and I now have marked on the chart an area that is the high of the day. If we can break above there, which is essentially the 111.50 level, the market should continue to reach towards the 112 level after that. I don’t have any interest in shorting this market, least not from current levels as I believe that the 110-level underneath is going to continue to be massively supportive. Ultimately, this is a market that tends to be highly sensitive to risk appetite and after the massive selloff in the stock markets on Wednesday, this pair fell apart. The fact that the Thursday session has been much more stable suggests that the markets are trying to find their footing. However, we are starting to roll over a bit, so we could find ourselves consolidating, between the 110 level on the bottom, and the 111.50 level on the top. Once we break out of this area, then it will be easier to make a longer-term trade.

Headlines continue to hijack the market

Unfortunately, headlines out of Washington DC will more than likely continue to rattle the market from time to time, and that is going to make trading very difficult. Quite frankly, many of my professional friends have decided to stand on the sidelines over the next several sessions as the market will then have to decide how it feels about everything that’s going on. Currently, it seems as if we are in a bit of a more “risk off” mode, but certainly I think most of the initial damage and perhaps even the largest part of the damage has been done.

Written by FX Empire