The USD/JPY made a third consecutive unusually strong weekly rise last week, closing near its high at its highest closing price seen in over 6 years. In fact, last week’s move was the strongest seen in several years. These are very bullish signs, with the Japanese Yen showing the greatest weakness of all major currencies putting this pair in focus right now. I made a good call last week seeing this pair as a buy.
Despite all these bullish signs, there is a reason for bulls to be cautious here: the price has hit an inflection point at 122.32 which has so far held as resistance. Friday also saw a strong drop of more than a day’s average true range (ATR) based upon recent volatility, and this can be a sign that a bullish move has run its course, at least for a while. However, the price did recover over the rest of the day to close above 122.00.
I think short JPY remains attractive as a long trade, but traders need to be careful with stop losses and make sure they are kept quite tight, as the price may now need to consolidate for a while before resuming its rise.
Despite all these bullish signs, there is a reason for bulls to be cautious here: the price has hit an inflection point at 122.32 which has so far held as resistance. Friday also saw a strong drop of more than a day’s average true range (ATR) based upon recent volatility, and this can be a sign that a bullish move has run its course, at least for a while. However, the price did recover over the rest of the day to close above 122.00.
I think short JPY remains attractive as a long trade, but traders need to be careful with stop losses and make sure they are kept quite tight, as the price may now need to consolidate for a while before resuming its rise.