USD/JPY Forecast April 9, 2012, Technical Analysis

The USD/JPY fell hard on Friday as the Non-Farm Payroll numbers came out weaker than expected. The miss was a total of 80,000 fewer jobs added in America than the 200,000 or so expect. The fall was immediate, but a bit of a bounce happened after the announcement, and the sell off doesn’t exactly look convincing.

The 81.50 level looks like it is trying to hold up as support, and it could possibly be the residue of the 82 level. The cluster below goes all the way to the 80 level, and that is our “line in the sand” when it comes to whether or not we are buying or selling. The 80 level is crucial to us, and we think that the market is simply pulling back from the extraordinary move up that we have seen.

Quite often, trend changes are very messy, and this one won’t be any different. The candle was negative for Friday, but truthfully the volume was very light as it was Good Friday. It is possible that if the markets had normal volume, that the bounce would have been more substantial. Monday will truly be important for this pair over the next week or so, but the true measure will be the aforementioned 80 mark.

The formation that we are seeing currently is a possible bullish flag, and if this is the case – the measurement of the flag pole suggests that the pair will move to the 90 mark. The trend has changed by most measures – the moving averages are all pointing up now, and the massive trend line from the financial meltdown has been broken as well. Because of this, we think that buying dips will be the way to go going forward.

The 85 level above will be the next massive hurdle to clear, and if we can – we will be willing to hold onto the long position for months or possibly years if the trend continues. The selling of this pair isn’t even a though until we get below the 80 level as it was the site of a massive breakout.

USD/JPY Forecast April 9, 2012, Technical Analysis

Written by FX Empire