The USD/JPY pair did very little during the session on Tuesday, but what's most important is the fact that we are above the downtrend line that was broken out to the upside on Monday. That being the case, I feel that this market is showing that there is significant buying pressure underneath, and as a result I think this market will continue much higher. However, I think that we could see a lot of choppiness in the meantime, and it's going to take a little bit of fortitude to hang onto this trade, which should be rather good in the long run.
We have two central banks that could possibly be on two different tracks, and as a result this could be a bit of a perfect storm going forward. After all, the Federal Reserve could possibly taper off of quantitative easing in the short term, and if that's the case the US dollar should continue to strengthen over time. On the other side of the Pacific, we have the Bank of Japan that that is trying like it's a priority to devalue the Yen. After all, the Japanese economy is highly dependent on exporting, and a cheaper Yen of course makes Japanese products more affordable in America, one of the largest markets for Japanese goods.
Long-term trend?
The neutral candle during the session on Tuesday gives me a bit of hope for the upside, simply because we did not hold onto the losses that occurred during the Tuesday session. After all, if the sellers couldn't keep price down, that of course is going to be a positive sign overall. I believe that in the next couple weeks we should get a bit of a longer-term signal, based upon the Federal Reserve and its decision.
Because of this, I feel that if you are patient enough you could find an opportunity for massive profits over the next several months, if not years. This pair has a long history of trending for long periods of time, and as a result I am very interested in going long of this market for the long-term.
