The USD/JPY pair had a very positive session on Thursday, especially considering that we were heading into a jobs announcement, something that typically moves this market quite violently. Because of this, I believe that the market wants to go higher, but as I write this we are starting to retreat a little bit from the highs. Ultimately, I believe that supportive action below should be a nice buying opportunity, especially near the 111 level. That was an area that offered resistance over the previous couple of sessions, and had offered a significant amount of support several sessions before that. Ultimately, this market should then go to the 112 handle, and then perhaps the 112.50 level above there. If we do breakdown, that changes everything but I still think there is a massive floor in this market somewhere near the 110 handle.
Buying dips?
It’s possible that buying dips will be the way forward in this market, but I need to see supportive action ahead of time before doing so. It may be almost impossible to get involved in this pair until we get the Nonfarm Payroll Numbers coming out the niceties, as they are so highly influential. I would anticipate that the early part of the day in this pair will be reasonably quiet, unless of course some type of geopolitical concern jumps into the fray. Ultimately, I do believe in the upside of this market, but I recognize that we have a lot of work to do, and that there’s a lot of noise above that will continue to make things difficult.
If we did breakdown below the 110 level, that would be catastrophic for this pair and almost certainly send it down to the 108 level, which is the 61.8% Fibonacci retracement level on the longer-term move.
Written by FX Empire