The EUR/JPY pair fell hard during the Friday session, slamming into the 130 handle. This level has been significant over and over in this currency pair, as you can see just a couple of weeks ago was significant resistance. What I find most interesting about this level is that there are so many hammers formed just underneath it, I feel that it's almost impenetrable.
The Bank of Japan continues to work against the value of the Yen, so I don't think I will be shorting this pair anytime soon. That being the case, it is a "buy only" type of marketplace, and as a result I am looking for that supportive candle to start buying. If you are little bit more aggressive though, you could make a serious case for just simply buying at this level.
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This pair typically will follow equity markets in general around the world. If the stock markets are doing fairly well, this is a "risk on" scenario, and that should push his pair higher. On the other hand, if stock markets around the world begin the selloff, this pair typically will fall. However, I do believe that there is enough noise between here and 128 that following will be met by a ferocious buying.
I think that this pair will eventually go to the 133 handle over the course of the next several weeks, and as a result this is a decent medium-term opportunity. However, I believe this market will go much higher over the course of the rest of the year, and as a result I think it's a long-term buy regardless. It really comes down to your timeframe, but if you are a longer-term trader, there is aptly no reason whatsoever to be short of this market, and plenty of reasons to be long.
That being said, I believe buying pullbacks work, as do breakouts to the upside. I see aptly no scenario where I would short this market, and I believe that the "floor" in this marketplace is the 125 handle. If the market goes below there, I believe the Bank of Japan would probably get involved