USD/JPY Forecast December 6, 2013, Technical Analysis

The USD/JPY pair fell hard during the session on Thursday, breaking the bottom of the neutral candle that we had formed on Wednesday. That neutral candle looks to be indicative of a market that’s trying to figure out what to do, but we also recognize the fact that the real support is down at the 101 level.

All things being equal, this should be an interesting session as the nonfarm payroll is normally very influential on what this market does longer-term. With both central banks on possibly diverging pathways, we could have a very nice uptrend about to form. This is because of the Federal Reserve and the possibility that it may taper off of quantitative easing, while the Bank of Japan is without a doubt very early in its loose monetary policy. This is what makes this particular day interesting, as employment numbers have been without a doubt, the largest concern of the Federal Reserve when it comes to whether or not they can taper off of the bond buying program that they have been on.

If the jobs number comes in strong, you can expect to see the US dollar appreciate drastically against the Japanese yen, as we will essentially have a “one-way trade” starting to form again. Ultimately, we think that this market will go higher, and that any pullback due to the announcement today should start a potential buying opportunity in a market that’s otherwise very strong.

As for selling is concerned, we wouldn’t even consider doing it into we get well below the 99 level, something that won’t happen anytime soon more than likely. Because of this, we feel that the market should find buyers at lower levels, at any hints of a cluster of support. We see those areas as 101, 100, and even as low as 99 quite possibly. Because of this, this is essentially a “wait-and-see” type of situation as we know, which direction we want to trade this market, we do simply need a supportive candle in order to tell us it’s time to do so.

Written by FX Empire