The EUR/JPY pair gapped at the open on Monday, but as you can see spent part of the day pulling back in order to fill that very same gap. The market closed at roughly 142, and as a result it looks like we are pressing up against that area for some type of breakout further to the upside. This market has been very bullish over the last several months, so it would not be surprising at all to me to see this market continue higher, and I fully expected to test the 145 level over the course of the next month or so.
It would more than likely do it much quicker, but we are heading towards the end of the year, and liquidity will start to drain from the market. I don't really think that a lot of traders are willing to throw on a ton of risk, as we get close to the holidays, so would make perfect sense that perhaps we would see continued bullishness, but only mildly so.
2014 could be a very good year for the bulls
I believe that as we enter January, the buyers will step back into this market. There are two things working on this pair to the upside right now in my opinion: the naturally bullish position since it appears that "risk on" is starting to come back into the marketplace. The other thing that's pushing this market higher is more than likely going to be short covering for traders who have made an absolute killing shorting this market earlier in the year.
Regardless, it's obvious to me that you can't sell this market, and there seems to be a bit of a floor in the market at roughly 139. With that being the case, I am only buying this market on dips, and fully respect the fact that the trend has decidedly changed over the last several months, and this market should continue to do quite well over the longer term. In fact, I believe that the Japanese yen is about to get pummeled for the next several months in a row.
