The USD/JPY pair had a negative session on Thursday, but found enough support at the 113.50 level to turn things around and form a perfect hammer on the hourly chart. It now looks as if the market is trying to consolidate in general, and that consolidation should attract enough buying pressure to eventually break out to the upside and go looking for the 115-resistance level. That is the top of the longer-term consolidation area that the market had been in for some time previously. Because of this, I believe that the buyers continue to look at pullbacks as value, and I believe that we will continue to see traders jump into this market every time we pull back. Ultimately, I think the real fight is closer to the 115 handle where we are expecting to see more noise. Short-term traders should continue to take advantage of volatility, but we have obviously seen so much bullish pressure that is difficult to imagine things are going to change immediately.
I believe that this pair is a longer-term uptrend, and the traders will continue to not only buying this pair, but hang onto it for long-term moves. If we can clear the 115 level, which I think we will eventually, this market will continue to go much higher. Currently, I know several professional traders that have massive positions built in this market, and while many of you will be selling your positions when it falls, they are adding to theirs. As far as I can tell, that should continue to be the way going forward. I have no interest in selling, and quite frankly don’t even have a scenario to do soup currently. There’s a lot of volatility in this pair under the best the conditions, so keeping position size small and simply adding as you go long as the best way.
Written by FX Empire