The USD/JPY pair initially went sideways during the Tuesday session, dipped significantly to test the 111.50 level, and then broke above the 112 handle. That’s a very bullish sign and I believe that we are now free to go towards the 114 level longer term. This is a market that of course is very risk sensitive, but it appears that the Japanese yen is being sold off against most currencies. If the stock markets can remain relatively stable, I believe this pair continues to grind to the upside. I have no interest in shorting it, least not until we break down below the 111 level, which I see as the “floor” in the most recent move.
I believe that the market will continue to offer value on dips, as we then get the opportunity to take advantage of a “cheap” US dollar. Ultimately, I think we do go much higher and every time we dip it’s an opportunity to get involved. I would at slightly during the dips, and build up a larger position. I do like this market longer term, and have for some time. However, I recognize that we could get a lot of trouble due to the Federal Reserve. Longer-term, I think that we will see a massive uptrend.
Choppiness continues to be an issue, but for those who are interested in the longer-term move, I believe that you will be rewarded if you can be patient enough to wait out through the volatility and of course the headlines around the world. The 114 level I believe begins a significant amount of resistance that extends to the 115 handle, but that is my target by the end of the summer. Speaking of summer, we could be very quiet on our way to the upside as volume drops.
Written by FX Empire