These candles may be marking end of Yen rally

For the past weeks, focus has immensely been on Yen, which rallied against all of its major trading counterparts. In last seven days, Yen has gained almost 4.4% against Dollar and so far this year, it is up close to 10% against Dollar, 13% against Pound and 5.3% against Euro. Yesterday, we pointed out from historical perspective that Yen may be nearing its end of rally as gains of 4.4% in six/seven days of consecutive gains are rare.

Moreover, last two days, volatility in Yen has been dropping as prices consolidating in tight range. In addition to that, candles are appearing in daily chart, which points to indecision by the market such as doji. This Doji, follows an inverted hammer.

While, long bets in Dollar against Yen unlikely but there could be large short covering on the menu, which would be sufficient to weaken by few hundred pips. Ride in Pound, may prove instrumental, which could lead to short covering in Pound/Yen.

Market participants are probably waiting out the next risk event, which could fuel some volatility and guide on next direction.

Yen is currently trading at 108.35 against Dollar, 123.7 against Euro and at 154.5 against Pound.