The USD/JPY pair initially fell during the day on Thursday but turned around at the 103 level to form a bit of a hammer. The hammer of course is a bullish sign, and if we can break above the top of the hammer for the day, it’s likely that the market should reach towards the 105 level. I believe that eventually we will go higher, so with that being the case it’s likely that the buyers will reenter the market, especially if the jobs numbers fairly good today. If it breaks down below the bottom of the hammer is a negative sign, but I think there’s so much in the way of support just below that it can be difficult to sell this market with any serious amount of money or time involved. In other words, I am looking at “long only” positions, but I need to see the top of that hammer broken first. I also need to wait until the jobs number comes out.
I recognize that the market has a lot of noise above, so it isn’t like we will shoot straight to the 105 level, but if there’s one announcement out there that can make this market shoot to the upside rather rapidly, it is the jobs number. If we fall from here, I am going to be looking for supportive candles below, but at this point in time I probably wouldn’t even begin to look for that until Monday at the earliest. I would let the market shake itself out and then eventually offer the trading opportunity.
Longer-term, I believe that if we can break above the 105.50 level above, it is signaling that we are going to go much higher, probably reaching towards the 107 handle, and then perhaps even higher than that. Expect volatility, but at this point in time I believe that the market is “leaning” to the upside. With all of that in mind, I just don’t see an opportunity to sell at this point although I do recognize we could fall lower.
