The US dollar has initially fallen during the trading session on Friday but has turned around to show signs of life again. That is not a huge surprise, but we are in danger of forming a bit of a “double top”, especially as the MACD shows divergence. You should also keep in mind that the ¥111 level is crucial and has offered a significant amount of resistance in the past. With that in mind, I think it is going to be interesting to see how this plays out but at the end of the day it is very likely that we will see a lot of choppy behavior as the ¥111 level has been so difficult to overcome. With that in mind, I have to pay close attention to this potential divergence issue.
USD/JPY Video 21.06.21
If we were to break down below the 50 day EMA, I believe that could set this pair back a couple of handles, which opens up a very nice opportunity. Because of this, I would become very short, but in the short term I am simply looking to fade the market near the ¥111 level. The only reason I would do this is that there is a clear barrier there, and if I were to be wrong on that trade, the market probably has much further to go to the upside and therefore it could make up my losses by flipping around. Friday is “quad witching”, so that could throw a bit of chaos into the market anyway. Because of this, I am very cautious, but I am very cognizant of the fact that we have not been able to get above here very often.
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This article was originally posted on FX Empire
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