Few flows noted in afternoon Tokyo trade
There was a pre-lunchtime flurry up to 87.50 in USD/JPY but since then trade has been very quiet.
The steep rally began from 79.00 in mid-November and since then there have really only been two pull-backs; the first from 82.80 to 81.80 and the current 150 pip pull-back which we are now in the midst of. It’s normal market behaviour to expect retracements and the steeper the up-trend, the steeper the pull-back. It’s also normal for the market to be worried about trading against very strong trends.
What to do next is of course the $64k question and of course absolutely no-one knows the answer with any great degree of certainty. If I were forced to trade it, I’d play the 86.80/88.40 range in the short-term with a bullish bias, keeping very tight stops on either side of this range.