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Finds Gravity Against the Yen

At this point, the idea of buying short-term pullbacks to take advantage of the value in the market is appealing.

  • The Japanese yen has gained some ground but has shown signs of hesitation by giving back some of its gains.
  • This is not surprising considering the overextended nature of the market and the major resistance barrier in the form of a previous high.
  • Although challenging, breaking through this level is not impossible, and it’s only a matter of time before the market takes off to the outside, possibly pulling back initially to find value.

The yen is a popular asset during turbulent times.

One of the driving forces behind the strength of the British pound is the high inflation in the United Kingdom. Therefore, it’s no surprise that the pound is performing well while the Bank of Japan continues its yield curve control policy, which keeps the interest rates in the 10-year Japanese bond below 50 basis points. In contrast, the high inflation in the UK provides an environment for continued growth in the British pound.

At this point, the idea of buying short-term pullbacks to take advantage of the value in the market is appealing. The ¥170 level is a significant psychological figure that could be an area where buyers come in to pick up some value. Additionally, the ¥168 level, which was the previous resistance, should have a significant amount of support attached to it due to market memory.

It’s important to note that the market is too strong to consider shorting the charts. The Japanese yen is currently facing numerous challenges that are working against it, and as such, the focus should be on finding value and a potential massive breakout above the ¥173 level that could open up a move all the way to the ¥175 level. After all, when even the central bank is looking likely to continue working against the value of the currency, things are somewhat preordained.

At the end of the day, the Japanese yen has shown some hesitation, but it’s likely only temporary. The market is overextended and has a significant resistance barrier to overcome, but the British pound’s strength and the Bank of Japan’s yield curve control policy are providing support. Therefore, it’s best to focus on finding value through short-term pullbacks and avoiding shorting the bear, as the market is too strong at the moment. A massive breakout above the ¥173 level could potentially lead to a move all the way up to the ¥175 level.

Potential signal: I am a buyer of dips in this market. I will be looking at the 170 level for a one-hour pinbar or bullish candle. If I get it, I will be aiming for 172, with a stop loss at 169.50.


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