The USD/JPY pair fell during the course of the session on Wednesday, but found enough support at the 119 level again to turn things back around and form a hammer for the second day in a row. Because of this, we believe that the market is going to continue to go higher given enough time, and that a break above the psychologically significant number of 120 is a reason to start buying yet again. The longer-term chart of course is in an uptrend, and we are currently testing what could be thought of as a bit of a positive trend line. Eventually, if we can get above the 120 level we feel that the 122 level will be tested as well. Above there, the market then heads to the 125 handle.
The US dollar continues to be the favored currency around the world, and as a result we feel that this market will continue to reflect that. Yes, the Japanese yen is considered to be a bit of a “safety currency”, but at the end of the day the Bank of Japan is working feverishly against the value of the Yen, so we feel that it will continue to sell the Yen going forward. The marketplace looks as if it could go much higher given enough time, and we even believe that a break above the 122 level is a “buy-and-hold” type of situation.
The market has plenty of support below, especially near the 119 level, as well as the 117 level. We have no interest in selling, simply because we think it’s only a matter of time before the Japanese get involved if we start to sell off drastically. The Nikkei continues to go higher, and that of course is by design from the Japanese central bankers. This is all tied together, and as a result we feel that the market will continue to go higher based upon all of the external pressures applied buying the largest players in the world, the central banks. With that, we remain bullish and see no opportunity to sell.
