The USD/JPY pair fell during the Friday session as the nonfarm payroll number came out weaker than expected. This move wouldn't have been unexpected, but what I do find interesting is that the 79.50 level has offered support again. This suggests to me that we may be looking at real underlying strength in this currency pair.
There is a certain amount of support underneath simply because of the Bank of Japan and its Yen printing, but one has to think that the overall sentiment seems to be changing. The main reason I say this is that we may be forming in a trending channel and the pair to simply doesn't seem to want to fall. The 80 level of course is holding it down, but that's not unexpected as it is such a large round number.
A break of that large round number, I would expect this pair to continue higher to the 80.60 level. However, I believe that the 80.60 level is without a doubt going to be significant in the future.
80.60 is the gate
In order to get a long-term sustained rally, I believe that the 80.60 level is sort of a gateway for that to happen. We need a daily close above that level in order to hold onto any long-term trades, and as such any buying that I do in the meantime is of the short-term nature. While I do believe that a break of the 80 handle is significant, I believe that 80.6 he is much more so. In fact, if we can get above 80.60, I believe that the 84 is calling.
As for selling this market, it's obvious that we cannot as the Bank of Japan continues to fight against Yen appreciation. If we do manage to break lower, I would be very interested in buying supportive candles closer to the 78 handle, as I see it is a bit of a "line in the sand" for the Japanese central bank. I will be long of this pair, I just don't know when. For myself, I am being very conservative and waiting until the daily close above the 80.60 level in order to not only by this pair, but to buy it for a longer term trade. If the Federal Reserve looks unlikely to ease monetary policy, this will be as close to a sure bet in the Forex market as you can get. However, until we get clarity of that, this pair could be very difficult to trade.