The USD/JPY pair initially fell during the course of the session on Friday, but found enough support down near the 102 level to bounce and form a massive hammer. This massive hammer suggests that we are starting to finally build up enough momentum to perhaps break above the all-important 103 level which has been so resistive. If we get that barrier at all the way, we should go to the 104 level first, and then eventually the 105 level.
I believe the pullbacks should continue to offer buying opportunities, but they will basically be short-term trading opportunities until we get above the 103 level. I think that we essentially have to continue to buy and buy again, but selling is going to be almost impossible as there is so much in the way of support below.
Longer-term basing pattern.
Ultimately, I believe that this pair goes much higher, perhaps heading to the 110 level. However, that’s going to take a long time, and that’s why I believe that there should be plenty of trading opportunities time and time again, and that this is the type of market that should be bought on the dips. I think that this could be a career making trade quite frankly, but it’s going to be in slow-motion as the United States continues to have artificially low interest rates. With that, there is no added incentive to hold this pair to the long side, unlike many of the other Yen related markets.
I am short of the Japanese yen against other currencies, most notably the Turkish lira. However, I believe that ultimately this market will find a way to grind higher. I also believe that interest rates will finally start climbing in the United States once we get a little bit more stability in the economic numbers. We are probably a little ways from that point in time, but certainly holding onto the Japanese yen is becoming less and less desirable over time. Ultimately, I still believe that we hit the 110 level, and it might be sooner than most people think.
