The USD/JPY pair broke down during the day on Monday, as we tested the 100 handle finally. However, this is a market that was banking on potential lack of interest-rate hikes coming out of the United States, but was ignoring the fact that the Bank of Japan will be supporting this market somewhere in this area. With this, it’s likely that the support that we had seen late in the day could continue to enter this market right around this area. Ultimately, I do believe that we rally, but you will have to be very resilient when it comes to hanging onto a trade in this particular pair.
It might be easier to trade this market to the long side based upon short-term charts. In fact, I have a strategy that I apply every once in a while, that offers several buying opportunities going forward and as a result I may find myself going long again and again until we finally break out to the upside. I have a hard time believing that we are going to break down significantly, just simply because the market is so aware the fact that the Bank of Japan is starting to lose its sense of humor when it comes to the value of the Japanese yen. Because of this, I think the psychological level of 100 will continue to attract buying pressure by traders that are concerned about potential intervention.
With this being the case, I think that if we can finally break above the 102.50 level, we could go much higher. With this being the case, it’s likely that the market will offer several small trading opportunities, and with that being the case I think that short-term traders will be very attracted to this market going forward. The market of course will find itself at the forefront of trader’s minds, as it is such a large area. With this being the case, I think some of the focus will come off of the GBP/USD pair, and swing over to this area. I have no interest in selling at this moment.
