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USD/JPY Breaks Above 120 Level - 23 December 2014

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The USD/JPY pair broke above the 120 level during the trading session on Monday, as it appears that we are ready to continue going much higher. The US stock indices all are at the highs, or essentially close enough to it in order for us to feel positive about this particular currency pair. I believe that the US dollar will continue to be the favored currency around the world, and the Japanese yen of course has been absolutely pummeled for some time. It’s really difficult to imagine this market doing anything to going higher over the longer term, so quite frankly this is a “buy on the dips” type of chart as far as I can see.

On top of that, the Federal Reserve has left the quantitative easing game, so there are a lot of traders out there anticipating either higher interest rates, or just simply a lack of weakness when it comes to interest-rate. On the other side the Pacific, we have the Bank of Japan which of course is working feverishly against the value of the Japanese yen, as they keep the liquidity spigots wide open.

Longer-term uptrend

I believe that we are in a longer-term uptrend, and that you can buy this pair every time he dips in order to make massive profits over the longer term. In fact, sooner or later the Federal Reserve will in fact raise interest rates, and we will start to see a positive swap in this pair again. Once that happens, you can expect this pair to be very faithful to the upside.

Ultimately, I believe that the 115 level is a bit of a floor at the moment, especially considering that we form such a perfect hammer last week at that level. I think that we will test the 122 level again which was the recent high, and then eventually hit the 125 level given enough time. I have no interest in selling this market as the Japanese yen is essentially the most toxic currency that I follow.

USDJPY 122314

Christopher Lewis
About Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
 

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