I do not usually recommend a short when a product has reached a support zone. However, from my analysis, I would say that the direction for USDJPY is still down (meaning strengthening Yen).
Here I will give you the reasons:
1. From Elliott Wave studies, a weak wave 3 combined with an ending diagonal wave 5 is not a common occurrence. I am led to believe that this entire way up is weak and thus there wouldn't be much support on the way down.
2. From the macro perspective, we know that Trump has triggered a volatile situation in Iran, and potentially, causing instability in the MIddle East Region.
2.1 We know that the Middle East is important because of crude oil production and a major disruption or uncertainty to supply is going to cause world economies to react.
2.1.1. Yen has been a safe haven during times of uncertainty and until now, this relationship still held true. Thus, until we have certainty that the issue can be resolved, traders and investors will run to park their money in Yen.
Additionally, I favored the stronger support zone in this chart but this is really bias on my side.
Here I will give you the reasons:
1. From Elliott Wave studies, a weak wave 3 combined with an ending diagonal wave 5 is not a common occurrence. I am led to believe that this entire way up is weak and thus there wouldn't be much support on the way down.
2. From the macro perspective, we know that Trump has triggered a volatile situation in Iran, and potentially, causing instability in the MIddle East Region.
2.1 We know that the Middle East is important because of crude oil production and a major disruption or uncertainty to supply is going to cause world economies to react.
2.1.1. Yen has been a safe haven during times of uncertainty and until now, this relationship still held true. Thus, until we have certainty that the issue can be resolved, traders and investors will run to park their money in Yen.
Additionally, I favored the stronger support zone in this chart but this is really bias on my side.
