The USD/JPY pair finally did what everybody was hoping for on Thursday, it finally broke above the 100 level. Because of this, it appears that this market is ready to continue much higher, and it must be said that the Bank of Japan must be very happy with what's going on so far. After all, it really hasn't had to do too much at this point of time in order to get the value of the currency to sink. It appears that during the Thursday session, many of the previous option barrier that the 100 handle have been overcome, and as a result this market looks like it's ready to go much higher.
Based upon the ascending triangle, it looks like this market could go as high as 104 in the short term. Ultimately, I believe that this market could go as high as 110, and that even possible by the end of the year in my opinion. I think that we are starting to enter a phase much like we had during the so-called "carry trade years", as the simple trade was to short the Yen, and by just about anything else.
Patience is key
Obviously, there will be times when the market pulls back. But being patient and waiting for some type of supportive candle in order to start going long again will be crucial going forward. I believe that the Bank of Japan has just started to work against the value of the Yen, and considering how deflationary the environment has been in the Japanese economy for the last 20 years or so, the idea that the Bank of Japan is looking to raise inflation to the 2% level suggests that there is a long, long way to go.
I personally will not buy the Yen anytime soon. In fact, I believe that there is a new paradigm in the Forex markets that make it so you simply cannot buy that currency anytime over the next couple of years. If that's the case, this could mark a return to the days of "easy profits", and a perfect example of what makes Forex such a wonderful market to trade.
