The USD/JPY pair fell hard during the session on Thursday as it has been doing so for two weeks. However, there was plenty of support below, and as a result the buyers stepped in at roughly 94 to push this market back up. The resulting candle was a massive hammer, which is focused on the 95 handle. The 95 handle is significant simply because the Bank of Japan has suggested that it was the bottom of the range they felt was comfortable for the Yen. If we get too much farther below current levels, I find it difficult to believe that the Bank of Japan will step in and one way or the other.
Going forward, I think that if we break above the highs for the session on Thursday, this is a classic buy signal and we should see a move towards the 99 handle. Once we get to the 99 handle, that's where the real work will begin. I believe that the 100 handle will eventually be overtaken, the real question is only how long it will take in the end.
JGBs
Japanese Government Bonds will be crucial going forward. There is a lot of concern the Japanese have lost control of their bond markets, and this will play absolute havoc with the risk appetite around the world. With that being the case, we expect of noise from Japan over the next several sessions, but eventually things will settle down.
With that being said, I am still long-term bearish of the Yen, which of course means that we are bullish of this pair. Eventually, I still think that were going to see 150, but that will take years in the making. If you look back at history, there have been times where we have "bottomed out" in this pair, only to see a bounce and followed by significant choppiness you for a continuation of the of trend and a much more smoother marketplace. I believe that we are currently in that job after the strong move higher, and that once we look at this down the road, there will come a point in time where we look back and realize this was a great buying opportunity for the long-term trader.
