The USD/JPY pair managed to make a small amount of gains during the session on Tuesday, and by giving back some of it, the pair formed a bit of a shooting star. However, we still see plenty of significant support at the 102 level, and as a result selling at this point time would be a bit dangerous. This doesn’t even take into account that the Bank of Japan certainly is going at best to devalue the Yen. That means that, this market looks like it wants to drift a little bit lower, and we suspect that the true massive amount of support will be down to the 100 level.
Keep in mind that this morning we will get a monetary policy statement out of the Bank of Japan. Because of this, this pair could move rather drastically, and as a result traders may wish to wait until after that announcement comes out.
However, we feel that this is a “buy only” pair anyway, so selling is an even option. The real question is whether or not the pair falls after the announcement. That being the case, if you have a longer-term horizon of time you are working with, the entry on this particular pair probably doesn’t matter too much. We have a very hard time believing that the 100 level will get broken down through again, and we believe that it is currently the “floor in this market.” Because of this, we are very confident in buying dips as they occur, and will probably continue to buy this pair over and over again.
This truly has been a seismic shift in the fundamentals of the pair as the Bank of Japan has stepped in and flexed its muscles. Because of this, we believe that this newfound trend will last several years, and as a result we simply are not even thinking about selling at this point. There was a time a few years ago that you simply bought this pair every time it dipped, it appears that we are heading right back towards that type of trading action again.
Written by FX Empire