The USD/JPY pair fell during the session on Tuesday, but as you can see found enough support just above the 98 handle in order to bounce and form a nice looking candle. This candle of course shows that the market is somewhat supported below, and continues to find buyers every time it dips. This being the case, it’s very interesting to us that the 99 level looks more and more resistive, and we do feel that if the market goes above the 99 handle, it should explode to the upside.
With this Friday being the nonfarm payroll announcement, we feel that this market will be highly influenced by that announcement as it typically is. After all, the world is waiting to see what the Federal Reserve will do as far as tapering off of quantitative easing is concerned, and we all have heard more than once that they are following the employment situation in the United States very closely.
If we see a fairly decent looking jobs number out of America on Friday, this pair will absolutely explode to the upside. In fact, this will be the market to trade for the foreseeable future if that in fact is true. Because of this we find the fact that this pair is starting to gain a little bit slightly odd as we don’t think the jobs market in America has improved that much. There have been hints that the Federal Reserve is still open to the idea of tapering off of quantitative easing in December that of course is going to be data dependent, which of course we do not see as being very supportive for that position.
The shape of the hammer is my so, and the set up a move above 99. If we get that move, we feel that this market will more than likely head to the 100 handle in fairly short order, and if we can get above that area we think that the market goes much higher. Ultimately, we do think that the longer-term trend is to the upside, but that will have more to do with the Bank of Japan battling the value of the Yen than anything else.
Written by FX Empire