USD/JPY Forecast May 15, 2017, Technical Analysis

The USD/JPY pair fell during the day on Friday, breaking below the 113.50 level. This is a psychologically significant level, and of course the “fair value” of the consolidation area previously marked on the chart by a pink box. If we can break down below the bottom of the scandal, I think we will probably go looking for the 112-level underneath, which is the next natural point of support. What I would also point out is that the weekly chart ended up forming a shooting star, so that shows that we certainly favor the downside. Because of this, I am much more comfortable shorting, least and the short-term, than buying.
Risk on, risk off
This pair tends to move with the risk appetite of the stock markets, especially the S&P 500. But it also tends to move to the treasury markets as well. With the less than stellar US announcements on Friday, I suspect that some traders are starting to bet that the Federal Reserve will be a will to raise interest rates as much as previously thought. Looking at the chart, we have also broken above in a very parabolic manner, so that of course suggests that we will continue to see buyers, but quite frankly a pullback is probably necessary to continue the bullish pressure. I think that the 112 level is a natural place to find it, so it makes quite a bit of sense that we pull back and go looking for the buyers in that area. If we could rally from here, we need to break above the 115 level before the longer-term move continues to the upside. Regardless, expect a lot of choppiness but it must be said that most young related pairs form shooting stars on weekly charts.
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