The US dollar has initially tried to rally during the trading session on Wednesday but ran into a significant amount of trouble at the ¥111.50 level yet again. As we have rolled over, it suggests that we are consolidating around this area to figure out the next move. That makes sense, we are at the 200 day EMA. This is an area that quite often attracts a lot of attention and therefore it makes sense that we would turn here. Beyond that, it tends to be very sensitive to what’s going on in the stock markets, which are reaching towards major resistance barriers in the United States.
Looking at the chart, it’s obvious that there is a resistance barrier between the ¥111.50 level and the ¥112 level,so I think it’s going to be very difficult to break out above there. If we can clear the ¥112 level, then we can really start to pick up the pace. I also believe that if we break down below the 50 day EMA, pictured in red, that we would start to break apart and head towards the ¥110 level and below.
The Australian dollar initially pulled back during trading on Wednesday, but found support yet again below the 0.7050 level, and therefore it looks as if we are trying to break above the top of the shooting star that formed during the Tuesday session. If we can do that, extensively breaking above the 0.71 handle, then I think we are very likely to go looking towards the 0.72 level above. There is far too much in the way of support at the 0.70 level for me to think about shorting this market, and I believe it extends at least 200 pips.
This article provided by NewsEdge.