The USD/JPY pair initially fell during the Monday session, but as you can see we have continue much higher, probably much higher than most market participants would’ve imagined as we close the day at the highs of the session. Looking at this chart, it becomes apparent to us that the 100 level will more than likely be much quicker than we originally thought. However, it should be obvious to everyone involved now that the pair simply cannot be sold. In fact, we believe that we have just started a multi-year leg higher in this market, and that this pair will be very reminiscent of what it was once like back in the pre-financial crisis era.
With that being said, the market certainly need some type of grass, and we assume that the 100 level will be a bit too resistive for the market to overcome after shooting straight up over the last couple of sessions. However, if you are already long of this market, it’s probably a good idea to at least allow the trade to go through that level. This is because if we can get a print above the 100 level, it is very likely that we will continue much higher. We think this is eventually the way this market goes, but still believe that hold back will more than likely happen soon.
This market appears to have a one-way feel to it. And that’s exactly how we are going to trade it. We simply cannot short it under any circumstances now, as the market has obviously made up its mind. We will look for pullbacks to reenter the trade after we hit the 100 level target. Pullbacks that show signs of support on medium time frames will be good enough for us to enter this market, and we believe that at this point in time we will be able to fall back below the 95 handle. In fact, we believe that is now the “floor” in this marketplace going forward. We also believe that if somehow the level did get broken, the Bank of Japan would enter at that point.
Written by FX Empire