USD/JPY Price Forecast December 20, 2017, Technical Analysis

The US dollar rallied significantly during the trading session on Tuesday, after initially going sideways. This was in reaction to the stock markets in America and of course American traders jumping in the currency markets to the upside. I think that the Japanese yen will continue to be very soft, as the Bank of Japan is light years away from tightening monetary policy. Because of this, I think that the pair will continue to attract money, especially if stock markets can continue to rally. We are getting towards the end of the year, and liquidity does become an issue due to the holidays, but I think that the longer-term move to the upside makes quite a bit of sense, as we have seen the market fight so hard at the 112 level to keep things afloat. Beyond that, on the hourly chart there is a bit of head and shoulders pattern, and that signifies that we should go to at least the 113.75 level above, which was the most recent high.

Overall, I think that eventually the pair will break above the 115 handle, but that’s a story for 2018. If that happens, it becomes a longer-term “buy-and-hold” scenario, as it would represent a major breakout and change of attitude. The markets continue to be noisy, so the occasional pullback will happen. However, those offer value for those traders out there who can use smaller position size, and of course show the one thing that’s almost impossible to do for many of you – show patience.