USD/JPY had a strong day on Monday as the Dollar is being bought up by traders in a bit to run to “safe havens”. The Dollar is without a doubt going to get a bid every time the markets get nervous, and the market being nervous seems to be more often than not. However, the 80 handle has been extremely resistive to even central bank interventions. The pair looks to be building upward pressure, and the triangle that is forming is indeed very bullish. If the triangle gets broken though, the long green candle from the last intervention should be paid attention to as it showed the Bank of Japan and its failure to break above the 80 mark that is so important from a long-term standpoint.
The Japanese Yen is being worked against by its own central bank, and this shows just how attractive the Yen looks to the market as they simply cannot get the markets to move away from it. The economic situation in Japan is starting to weaken a bit, so this could in turn help, but the 80 mark that we mentioned above certainly is what needs to be overtaken to think that any rally can be sustained. Although the triangle looks strong, we prefer letting this pair rise to the 80 level, or at least as close as it can – and then selling aggressively. If we get stopped out, it is because the trend has changed, and we would be willing to take the opposite position as the daily close above 80 would be so massively bullish for this market.
2012 is coming fast, and the volume of trading will dry up the later we get into the week. Because of this, we could see a bit of a spike in this pair, but this should only serve as a chance to sell form higher levels as the longer-term trend continues.
Written by FX Empire