The USD/JPY pair initially fell during the session on Monday, but found enough support to turn things back around and form a nice-looking hammer. The hammer of course suggests that we are going to continue going higher, and the fact that we cleared the 121 level of course also means that we have broken above a certain amount of resistance. With that, we believe that the market will continue towards the 122 level, which of course was resistive in the past. Nonetheless, it’s only a matter time before he break out above there and head towards 125 given enough time.
We believe the pullbacks continue to offer value in this pair, as the US dollar is without a doubt the strongest currency in the world, and of course the Bank of Japan continues to work against the value of the Japanese yen. This has been going on for quite some time, so really at this point in time we don’t see any reason to start selling this pair. In fact, we believe that the longer-term traders out there are already long of it, and simply adding to the position as time goes along.
If we do get a pullback from here, the 120 level should be massively supportive, as it has been a bit of a floor. This was previously massive resistance, as the market struggled to get above there. However, now that we are above it, and should now act as significant support. With that being the case, we believe that the buyers will step in and pick this pair up every time he drops under the idea of value in the greenback.
Ultimately, we believe that this market will continue to go much higher, and that it will be more or less a “buy on the dips” type of situation going forward during a longer-term buy-and-hold type of uptrend. Ultimately, we believe that a lot of careers are presently being made by this pair, and as a result more and more bullish pressure will continue in this marketplace as we continue to see the herd move forward.