The USD/JPY pair initially tried to rally during the session on Monday but ran into quite a bit of trouble near the 111.75 level. We pulled back, looking for support near the 111.35 handle, where we had seen resistance in the past. I believe that the market will continue to try to find buyers underneath based upon the risk appetite of the session. I think that there is plenty of support at the 111 level, and we have recently broken above the top of a hammer on the weekly chart. That’s a very bullish sign, and therefore I think it’s only a matter of time before we continue towards the 112 handle. Even if we do breakdown below the 111 level, I think that the market will find plenty of support near the 110 handle after that.
I believe in buying dips, and every time that the market pulls back, it’s likely that we will find enough value hunting to get involved to the market and push this market to the upside. I believe that the market will then go to the 112.50 level if we can break above the top of that resistance. A break above there send this market to the 114 handle. I believe that happens, but is can it take some time before we can get there. The 110-level underneath will be the absolute “floor” in this market as far as I can see, and this sudden sideways action of the last several sessions is very bullish sign as it shows that the market is very comfortable with these levels. The market should continue to be choppy, but with an upward bias as far as I can tell. Longer-term, I believe we go much, much higher.
Written by FX Empire