USD/JPY finds support at crucial level

The US dollar rallied against the Japanese yen during the week, reaching as high as the 107 handle, before giving back some of the gains. Ultimately, I think that this market should continue to find support at the 105 level, and more importantly, the daily uptrend line that I have marked on the chart. This uptrend line goes back to April 2016 and is crucial. With so many potential support reasons just below, I suspect that we will find buyers every time we dip. We may be trying to form a bit of a basing pattern, and that of course could be a nice buying opportunity.

However, if we were to break down below the 105 handle, I think that could unwind the market rather drastically. Essentially, I believe that the 105 level is one of the most important levels on this chart, so I think it will continue to be very noisy in this area, but longer-term I think that we are trying to find enough momentum to continue going higher. This will be helped if the talk of trade wars disappears, as this market has been reacting quite negatively to the idea of a spat between the United States and China. On the other side of that coin is that if the trade wars were to flareup, I think that we breakdown rather significantly as the risk trade would unwind quite drastically on the news. If we do, then I think the market goes down to the 100 handle.