USD/JPY Forecast December 18, 2017, Technical Analysis

The US dollar initially dipped towards the 112 level during the Friday trading session, but we found enough buyers underneath to turn around and rally to the upside. The 112.75 level is an area that we targeted, and at this point I think it’s likely that we will continue to see buyers on short-term dips as the 112 level is rather important. This market is highly sensitive to risk appetite, so pay attention to stock markets as they can be a bit of a harbinger as to where the US dollar goes against the Japanese yen. Of special interest is the S&P 500, which has a very strong correlation with this currency pair. Overall, I do believe that we continue to break out to the upside, but there is going to be a lot of noise that could cause resistance.

I believe that the 114.50 level above is the beginning of massive resistance, and as we have pulled back significantly, this could be an attempt to build up the necessary momentum to break out to the upside. I believe that the 112 Level Giving Way to selling pressure could send this market to 111, which is the 50% Fibonacci retracement level of the recent rally. That would only make me more bullish. If we can break above the 114.50 level, and more importantly the 115 handle, the market could go much higher and it becomes more of an investment situation going forward. I believe that the market should then go to the 118-handle next, on our way to the 120 handle. This is a market that continues to be noisy, but positive.

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