USD/JPY Price Forecast – uptrend line holds as support
You can see on the hourly chart we crashed towards the uptrend line only to bounce. In fact, it was a perfect test of the uptrend line, and I believe that some value hunters are starting to come into the marketplace now. This bounce could be bought, but then again I think it’s going to be noisy regardless of what is going to happen over the next several days. Because of this, I would anticipate that smaller position sizes should be employed, as although there is a significant amount of demand just below, there is a lot of noise above. Longer-term, this pair does tend to move with risk appetite, so if we get some type of calming of trade tensions, this market will turn around.
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The alternate scenario of course is that we break down below the uptrend line, and that would have the market looking towards the ¥110 level which should be supportive as well. Because of this, I think that the oversold condition of the pair is about to be corrected, at least over the course of the next several days. Overall, I believe that there is probably more risk to the upside than the down, but with this type of volatility it’s likely best approached in a very cautious manner.