The USD/JPY pair fell at first on Tuesday, but managed to pop hard to the upside in the most recent example of a market that simply doesn’t want to fall for any significant amount of time. The pair is being bolstered by a serious breakout to the upside above the 80 level recently, and a breaking of a major trend line as well.
The Bank of Japan continues to buy corporate bonds as well as JGBs, flooding the markets with Yen and in turn devaluing the currency. In fact, the most recent move has been so extreme by the BoJ that the market looks as if it is in the middle of changing direction or trend. This will continue to favor the Dollar as the Yen is now a currency that is being actively worked against.
The 80 level will continue to serve as our “floor” in this market, and it now looks as if a return to that level is becoming less and less likely. The pair should continue to rise over time, and we see the dips as potential buying opportunities at this point. As you can see from the last several sessions, the pair is being supported every time it falls, and this is a sign of a very healthy market.
The pair is most certainly “buy only” for us, and we will continue to do just that. The selling of this pair is impossible until we break below the 80 handle again. The dips should continue to see traders come into the market that perhaps missed the original breakout. The 85 level above is the next major resistance point, and until we get there, we will try to let any winners run. (We are already long of this pair at the time of writing.)
Buying on supportive candles after dips on shorter timeframes is our strategy, and so far it has worked like a charm. We plan on being long of this market at least until 85, and quite frankly would consider holding onto a core position for much higher levels.
Written by FX Empire