The USD/JPY pair bounced significantly during the day on Wednesday, but found enough noise near the 113.60 level to turn around and pull back significantly. However, I think that the 113 level will continue to be supportive, and if we can stay above there I believe the buyers will continue to push this market to the upside. After all, we have made a “higher high”, which of course is a very bullish sign. Alternately, if we break down below the 112.75 level, the markets will probably drift down to the 112.50 level, and then eventually the 112 level. The markets continue to look at pullbacks as value in my estimation, and of course this pair tends to be sensitive to risk appetite. If we can reach towards the 114 level, there is a significant amount of resistance there, but a break above there should send this market to the 115 handle.
I continue to believe that this market is one that you can buy on dips, as it represents value in the US dollar which is one of my favorite currency pairs against the Japanese yen. The Japanese yen has been sold off as the Bank of Japan looks very accommodative, and course stock markets have been very healthy which this pair tends to have a strong correlation with, especially the S&P 500. I believe that we will eventually see this market reach towards the 114 handle, and then by extension breakout to the 115 level. Move above there is a longer-term “buy-and-hold” situation just waiting to happen. I will be adding to my positions going forward on breakouts, as I believe that we can make a massive moved to the upside over the next several years. I have no interest in selling anytime soon.
Written by FX Empire