The USD/JPY pair went sideways initially during the day on Monday but then shot towards the 111.50 handle. By testing that area, we are trying to break through a significant resistance barrier. Once we break above their, the market should then go to the 112 level. I believe pullbacks should continue to offer buying opportunities, that the 110.50 level may offer as well. Ultimately, this is a market that continues to look bullish longer-term, and the fact that we are approaching the top of the hammer from the weekly chart suggests that we are starting to see a real pick up in bullish pressure. On top of that, the USD/JPY pair tends to follow the stock markets in general, so having said that I think that the market should continue to move right along.
I believe in buying pullbacks, and will continue to do so unless of course we breakdown below the most recent low on Friday, near the 110.60 level. Ultimately, I think that the market will continue to fight to the upside but it is going to be volatile as these markets will focus on several headlines. Ultimately though, I also believe that the Federal Reserve is looking very likely to raise interest rates yet again this week, and that should continue to work in the favor of this pair as well. I have no interest in shorting this market, even if we did breakdown below the aforementioned level, as I believe that the 110 level will also be massively supportive. Given enough time, I believe that the longer-term “buy-and-hold” traders will continue to be interested in this market, and therefore adding small positions every time you get ahead might be the best way to play this market.
Written by FX Empire