The USD/JPY pair fell initially during the session on Wednesday, but turned back around and formed a nice-looking hammer. That being the case, looks as if this market is ready to continue going higher, continuing the long-term uptrend that we have seen for some time. Ultimately though, we are still within the consolidation area that the market has been stuck in for some time. With that, we believe that the move is probably going to be to the 120 handle. However, a break above there would in fact be a very positive sign and have us buying this market hand over fist. The shape of the candle is of course perfect, and the fact that we are finding quite a bit of support at the 160 level makes a lot of sense as we have seen it offer support in the past.
If we can break the top is hammer, we believe that the move to the 120 level is coming. Don’t get us wrong though, it will probably take some time to get there, as is market has been fairly choppy lately. But we’re the first to a knowledge that the uptrend is strong, and that if this does in fact end up being the swing low, it is higher than the previous one. That of course is a very positive sign long-term.
We like buying this pair on dips, and this is the perfect type of pullback to get involved in. Ultimately, we feel that the market will break out to the upside and probably head towards the 125 handle, but that obviously to take some time. The 115 level below is a bit of a “floor” in this market, so therefore we feel that the sellers will not be able to push this market below there. With that being said we aren’t even looking for selling opportunities at the moment, and therefore are essentially “buy only.” In fact, we believe that even if the 115 level gets broken, it’s very likely that there’s an even bigger floor at the 110 handle.