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.
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.