USD/JPY bullish correction
Fear clouded the market and the market is in flight mode toward safe assets. U.S dollar and Yen both known as safe assets and when Yen stronger than the U.S dollar means the market is in fear mode. Current bearish movement in USD/JPY incited by the failure of trade talks between U.S-China.
In the previous week, U.S government implement the raise of tariff from 10% to 25% toward $200b imported goods from China. President Trump mentioned further $325b goods under review for 25% tariff. China said it will retaliate against the tariff. Traders and investors are waiting for the retaliation while fleeing to safe-haven assets.
USD/JPY expected to weaken further under the current fundamental situation.
Click here to read USD/JPY April 2019 analysis
The test on 112.00 – 112.50 resistance resulted in rejection and this month the pair fall sharply. Without any change in the direction, we could expect USD/JPY to hit 108.50 support level soon. Will a breakout below the support level happen? Alternatively, will a bounce happen?
No hope for the bull at the current time, USD/JPY started a bearish leg after the pair rejected from 112.00 – 112.50 resistance and formed a bearish engulfing pattern. We now entered the fourth bearish week. Will the pair reverse current bearish pressure and close above 110.00?
USD/JPY turned bearish now as the pair closed below 110.00. When the pair fell below 110.00 it printed a lower low on the daily chart. At the current time, if the pair started upward movement then it might be limited below the resistance 110.00. Traders could prepare for short position between 110.00 – 111.00
A short position could be taken from 110.00 – 111.00 area after a bearish pattern formed.
A long position might need to wait until the pair reach 108.50 and formed a strong bullish pattern.