USD/JPY had a strong showing during the session on Wednesday, as it initially dipped lower, but then turned around and bounced fairly hard. At the end of the day, we found ourselves just below the 94 handle, and this of course is a fairly bullish sign. As you can see, the most recent low is much higher than the one before. This is the very epitome of what makes a bullish market.
However, it must be said that 94.50 is an obvious resistance area that needs to be overcome buying the bulls in order to continue higher. In fact, I believe that it is simply the beginning of significant resistance at the 95 handle, as it is a large round psychologically significant number. On top of that, 95 are significant on the longer-term charts as well, and that of course always attracts buyers and sellers.
The Bank of Japan has a statement coming out later, and as a result this market could be moved rather drastically. It's really a matter of how dovish the statement is, and there really shouldn't be too much in the way of surprises. It really comes down some numbers, and whether or not they suggest more asset purchases are coming. At this point in time, there's no reason to think that they while. In a sense, I believe that the market on Wednesday was trying to front run the central bank and its announcement.
Bank of Japan
The Bank of Japan still insists that it is going to aim for a 2% inflation rate. This is something that the Japanese economy has and done in ages, and it will take a massive amount of quantitative easing in order to inflate the economy like that. With that being the case, I have no doubt that this pair will eventually break through the 95 handle, and run towards the 100 handle before it's all said and done. In fact, I believe that we are in a long-term bull market for this pair, but presently are banging on the door of something that is fairly significant in its resistance. It really comes down to your timeframe, but at this point in time I only buy this pair.
