The USD/JPY pair shot higher during the day on Wednesday, using the 112 level as support. With the impulsive move, I think that the US dollar is ready to continue to go higher, and that this move is the beginning of something bigger. However, when I’m looking at the hourly chart, I can see that the markets are becoming a bit overextended near the 113 level. It makes sense that the large, round, psychologically significant level causes a bit of an issue, but I think that this pullback will end up being a buying opportunity. Because of this, I’m looking for an opportunity to pick up value at lower levels, so on this potential pull back, I think that it is only a matter of time before the buyers get involved, and I would be especially interested near the 112.50 level as it is an area that has shown support and resistance in the past, also being the 50% Fibonacci retracement level doesn’t hurt either.
Longer-term, I think that the market is going to continue to go towards the 114.50 level, which was the top of the longer-term consolidation that the market has been stuck in. Once we break above there, I think the market then goes to the 115 handle, and then perhaps even higher than that. Ultimately, this is a market that I think that buyers will return to, and that the 112 level should be a bit of a floor going forward. If we were to break down below there, I still think there’s plenty of support underneath that the 111 level, so this is a “buy only” market for what I can see. That doesn’t mean that you should jump in immediately, but picking up value makes a lot of sense.
Written by FX Empire