The USD/JPY pair fell initially during the course of the session on Wednesday, but not enough support near the 101.50 level to bounce enough to form a hammer. This hammer of course suggests that there are buyers below, and I think that this market will continue to attract buyers from a short-term perspective going forward. With that, I think that the market will be one that I don’t want to sell going forward, and it does appear that the 101.50 level should continue to be an area that should be paid attention to. I don’t really think that this market has the wherewithal to break down from here, and even if it does the 101 level is even more supportive in my opinion.
In fact, I believe that a move down to the 101 level would scream “buy me.” With this, I will be aggressive when buying down there, and could be a nice opportunity for the short term. The question then becomes whether or not we can continue to go higher, which I think we will eventually but I find it very difficult to imagine that it’s going to happen right away. After all, we are starting to head into the summer months, a time when traditionally the Forex markets get a bit sleepy.
Conflicting signals normally mean sideways.
When I see conflicting signals, such as the hammer from the Wednesday session and the shooting star from the Tuesday session that normally tips me off that the market isn’t ready to do much. Because of this, I feel that the market is going to be one that is probably best avoided until we get some type of impulsive candle, however I believe that this is a “buy only” type of market going forward. When I want to see is some type pullback, or a massive bullish candle and a break above the 103 level, which I believe is very resistant. Until then, I’m a bit hesitant to get involved in this market, and as a result will be on the sidelines simply observing.
