Yen heading towards a crossroads


USDJPY has been making fairly steady progress so far, starting off 2019 around 107.50 and after 2 ½ months of hard slog is currently trading around 4 Yen higher on the year. This is very pedestrian for this pair, and although it is often a far more logical market than most (and therefore an excellent choice for beginners wishing to sharpen their skills), this particular product seems to have fallen off the radar for many traders.  We are seeing a rising wedge pattern here and it is inevitable that it will break out eventually. Current resistance is around 112.00 with rising support at 111.00. Almost inevitably, this has all the appearance of a Bull trap, because even if the 112.00 level breaks, the next 100 points up are going to require either very deep pockets or an unforeseen event to overcome further resistance between 113.75/00. The downside, by contrast, has a lot more scope, plus as the market is probably slightly long the chance of Stop Loss and panic selling helping any future fall is proportionately greater.  We’d not advocate building a short position just yet, but it is worth monitoring with a view to joining in when it does break.

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