The USD/JPY pair fell during the session on Wednesday, breaking below the 120 level at one point in time. We found enough support below there to turn things back around and form a bit of a hammer, and that of course mirrors what we saw during the Tuesday session. I think if we can break above the top of the hammer, the market should continue to go higher, probably heading to the 122 handle. That area could be resistive, and as a result I think that a break higher has to be looked at as a possible buying opportunity but for short-term only. Ultimately, I feel that the jobs number coming out tomorrow will probably be more influential on this pair than anything we see today. That is why if we break down from here I am still not looking for selling opportunities and believe that sooner or later the buyers will return. I simply believe that the jobs report might be the catalyst to go higher.
Patience should be rewarded
I believe that patience will be rewarded in this marketplace, but you have to be willing to accept the volatility. After all, this pair tends to be one of the more volatile major pairs, and as a result it will quite often scare new traders. However, I believe that the massive selloff that we have seen recently is simply value offering itself to the marketplace. You have to be able to handle the volatility going forward, so I would think it will be easier to take small positions in this market. I have no interest in selling, and at this point in time really don’t have any scenario in which I feel comfortable doing so.
Given enough time, I would anticipate this market heading back to the 125 handle, but at this moment it seems to be a bit congested and difficult. With that, a small position will make holding onto the longer-term move much easier. The jobs numbers coming out on Friday will more than likely cause this market to be very volatile.
