The USD/JPY pair did almost nothing during the session on Tuesday, sitting right at the 98 handle. The 98 handle has been an area that's been supportive and resistive in the past, and because of that it doesn't surprise me that the market is essentially sitting still in this general vicinity. That being the case, we also have to keep in mind that the Federal Reserve is releasing its minutes from the last meeting, at 2:30 PM New York time. The markets will of course try to figure out what's going on as far as tapering off of quantitative easing is concerned, and because of that I feel that this market will be difficult to trade until then.
That being said, this will be the market you want to be involved in though. After all, the Bank of Japan has just entered its quantitative easing program, and if the Federal Reserve is getting ready to get out of theirs, that should be a nice set up for a long position in this particular currency pair. It's essentially buying the US dollar, which is just now starting its tightening cycle, while the Yen is beginning its loosening cycle.
This is a buy only pair anyway.
With the Bank of Japan working against the value of the yen, I only buy this pair regardless. This sets up quite nicely at this moment time though, because we could get a significant move after the release. In fact, I think that if it appears that the Federal Reserve is getting ready to taper off of quantitative easing, this market will more than likely aim for the 100 level right away. After that, I could see the 103 level, and then eventually the 105 level.
I still believe that we are entering a long-term uptrend in this market, so in the end, I think that longer-term traders are probably accumulating positions down in this general vicinity anyways. That being the case, it's only a matter of being patient enough to see a supportive candle or a breakout above the top of the candle for the session on Tuesday.