The USD/JPY pair did almost nothing during the session on Monday, mainly because of the lack of liquidity that we would've seen coming out of both America and the United Kingdom. While the Americans were celebrating Memorial Day, the British were celebrating something known as "Spring Bank Holiday." Either way, large funds were simply not trading in the markets, and as a result it was difficult to get the Forex markets to move with any significant purpose.
Look at the charts, you can see that the market fell slightly, the 101 level continues to offer support. I believe that the 101 level is the beginning of significant support all the way down to the psychologically significant 100 level, and as a result we are currently sitting on top of the "zone" that has been so important in the past as resistance. I believe that buying down near these low areas makes sense, and based upon the ascending triangle that we have broken out of previously, it appears that the market is heading towards the 105 level.
Bank of Japan
We have to keep in mind that the Bank of Japan continues to be aggressively against the value of the Yen, and as a result this market really only has one direction it can go over the long run. There is also the possibility that the Japanese lose control of their bond market, and if that happens the value of the yen will absolutely collapse.
In that circumstance, we could see a massive spike in this pair. Of course, that isn't what I'm banking upon, just that the longer-term trend will continue to go to the upside. It obviously won't happen in one big move, but I believe that we are beginning to look a lot like 2005, we simply bought this market every time it dipped. Because of that, I am not only long of it now, but will be adding every time we get like this. Eventually, I plan on having a very large position in this pair, and holding onto it for some significant amount of time.
