USD/JPY Forecast October 27, 2017, Technical Analysis

The US dollar rallied against the Japanese yen after initially falling on Thursday, testing the 113.30 level. By doing so, the market looks likely to continue to try to rally and reach towards the 114.50 handle, which is the top of the recent consolidation that we have seen in this pair. A break above there then has the market targeting the 115 handle, which has a massive amount of psychological significance to it, and that of course has the market going higher very rapidly as it would be a bit of a “beach ball underwater” effect. In other words, once we finally do break the surface, we should shoot higher immediately. However, there’s a lot of churning to do between now and then, especially considering that there are a lot of questions when it comes to the Federal Reserve over the next year, not the least of which would be the appointing of the next Federal Reserve Chairman.
Ultimately, I look at this is a buy on the dips type of scenario, and will continue to do just that every time we offer a bit of value in the US dollar. Quite frankly, I think the selling off of the US dollar is just about done, and when I say that I mean around the world. The 112-level underneath is massively supportive, and I believe important to pay attention to as there is structural support in that region. However, I would be surprised to see this market go down to that level, and quite frankly I think that the 113 level is probably going to play massive support between now and then. I am bullish, but I recognize the volatility is the norm in this market, and therefore is something that should be prepared for.