The USD/JPY pair rose above the 100 handle during the session on Tuesday, breaking above the psychologically significant barrier, and showing that the market is indeed ready to continue higher in my opinion. I've been waiting for this level to be overcome, and we have definitely done so with gusto during the session. However, the next couple of days will be a little less liquid than usual, as the Americans are away at the Independence Day celebrations. Because of this, the markets may not be" normal" until at least Friday, and quite possibly Monday.
Nonetheless, this is a move that goes with the overall trend of the last several months, and as a result I feel perfectly comfortable going long if this market although I do see a little bit of resistance at the 100.75 handle. In the end, I would use short term charts to look for supportive candles on small pullbacks, and definitely would look for the 100 level to be supportive if we are going to go any higher.
Longer-term trend
I believe that we are in the beginning of a longer-term trend, and that we will eventually hit the 110 level over the next several months, possibly even before the end of the year. This will be especially true if the Federal Reserve does begin to taper off of the quantitative easing, as some market participants do not believe they will. Because of this there will be a little bit of "catching up" that this pair will have to do. Although it has shown strength recently, the fact is there are still plenty people out there that don't take the Federal Reserve at his word.
Going forward, expect a lot of choppiness until we break out of the 103.50 level, but certainly you have to be biased to the upside at this moment. The Bank of Japan and the Federal Reserve will be working against you, at least in this pair whether they mean to or not if you are a seller. That is not the environment that I plan on risking any trading capital in. Because of this it's "buy only" in this market.