Trading Strategy: The Dollar/Yen Hits a Fresh Monthly Low

USD/JPY (¥107.198)

• Resistance Levels: ¥107.90, ¥108.74, ¥110.10
• Support Levels: ¥106.60, ¥105.55, ¥104.50

The U.S. Dollar has now hit a one month low in the USD/JPY Forex pair. Sellers are now looking to challenge the key technical level of ¥107. Should we see a daily close below this level then we will look to test ¥106.60. A break below this level will then challenge ¥105.55 then the gates open up for ¥104.50.

Should the dollar reverse direction, we need to break above congestion area marked at ¥107.60 to 107.90. A daily close back above this level will challenge ¥108.74.

Let’s discuss a bit of trading strategy. It is not the time to panic. First note the waning momentum with the RSI moving back towards 70. Also entering a short trade right now, simply from a risk to reward perspective does not make much sense right now. Why, we are near a key support level. There is also no key bullish reversal signals to warrant long term long positions. Outlook is flat till we get a stronger signal. For now look for some sideways choppy trading till we close above or under ¥107. Once that happens, we should have a clear direction signal.