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USD/JPY Daily Outlook - May 1, 2013

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The USD/JPY pair fell during the session on Tuesday, and even managed to break the bottom of the hammer from the Monday session. Until circumstances, this is a very bearish signal and I would probably consider selling at this point. However, as you probably know this pair is anything but normal.

The Bank of Japan will make sure this pair doesn't fall too rapidly, and as a result I don't have any intention on selling it under any circumstances, barring the Bank of Japan stating that they are no longer worried about the value of the Yen. Since I don't see this happening anytime soon, every time we pullback in this pair I think of whether or not I'm going to get a supportive candle in order to start buying again.

100 still matters


The 100 level still matters greatly in this pair, and I believe that that is the key to breaking out to the upside in continuing the longer-term uptrend as this pair should eventually hit much higher levels. However, I have been hearing stories of massive options barriers just above this level, and as a result I think that we could be stuck underneath it for some time.

Having said that, a daily close above the 100 level I believe opens the door to the 110 level after that. This would of course be a very bullish sign, and would have almost everybody in the Forex markets running in one direction, which of course is a perfect set of conditions for real "melt up." I could happen in this pair, as it does from time to time, as you can see from back in early April.

I believe that the president "floor" in this market is at the 95 handle, and the fact that the Bank of Japan has even stated that they are comfortable with the Yen trading somewhere between 95 and 100, that it should be respected. In fact, I am willing to buy this pair anywhere close to that level, regardless of price action that I see at that point in time.

USDJPY Daily

Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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