The USD/JPY pair rose during the session on Thursday, slamming into the bottom of the previous triangle, so now we have to ask whether or not the market is negating the triangle, or it is simply returning to the site of the breakdown and looking to retest it for resistance. That being the case, the best thing do is simply sit out on the sidelines for the session, knowing that the close for the Friday session will be vital in order to continue trading.
By waiting until we get the daily close, we know what the true intention of the market seems to be, and as a result we can perhaps get a better read on where this market is going to go. That's especially important as the uptrend line should be resistive, so therefore I am a bit cautious simply because of the possibility of the resistance been fairly weak.
Central banks playing tug-of-war.
The Federal Reserve is looking ready to name Janet Yellen the Chairwoman of the Federal Reserve, and that of course is going to be very bearish for the US dollar, as she is known as a dove. At the same time, the Bank of Japan is most certainly working against the value of the Yen, and that will push in the other direction. That being the case, this is essentially a fight between two of the most dovish central banks around the world.
Because of the sensitivity on the area, I am not making a trade until we get a daily close. Depending on where the market closes on Friday, I will make a decision to buy or sell. I think that if we close well within the previous triangle area, I would be a buyer at that point. However, if we get a resistive candle right here, then we have to wonder whether or not the downtrend hasn't come back. In fact, that would probably be a pretty decent sell signal. However, if we close at a higher price, it's very likely that this pair will continue up, and up again, perhaps aiming towards the 100 level.
