USD/JPY - Will Bulls Continue to Dominate This Pair?
Yesterday we saw a mixed and indecisive day on this pair as we saw price reach the monthly key resistance level of 110.00, pushing higher around 30 PIPs on the day before falling around 50 PIPs to retest the 109.50 area. We can see from this price action there was a clear sell of as soon as we reached the 110.00 level which was to be expected -but how long will this last.
The 110.00 key level is very important for this pair and though I do expect a sell-off from the regions soon, I do believe yesterday's spike/pullback from 110.00 without really challenging for a break of the key level was a bit premature.
We can see from my chart price pushed lower, giving all the correct signs of rejection from 110.00 with a bearish engulfing candlestick and a break of the counter trendline on the 4-hour chart, but to truly break a trend we must break the previous higher-low which in this case did not happen. As shown on my chart we have created a new higher-low and we are on our way to make a new higher-high. I am expecting today to push through the 110.000 level and today's candlestick will be vital. Can we see a break and an all-important close above 110.00; or pull-back and close below -showing weakness in the bulls and demonstrating the bears are entering the market. This area is critical and needs to be watched carefully and with lots of patience.
The bigger timeframes always prevail’s and show us what the overall bias and direction of the market. We can see on the weekly and daily chart this pair clearly did not like the 109.00 and below areas and bulls are currently in control, so it will not surprise me should this pair move higher so again, keeping 110.00 as a critical level as to what happens next