USD/JPY Forecast April 30, 2014, Technical Analysis

The USD/JPY pair initially tried to rally during the session on Tuesday, but as you can see we found a quite a bit of resistance above, sending the market back down and forming a shooting star. While the shooting star of course is a negative sign, the reality is that the market has plenty of support below. We think this is simply a sign of a market that is and quite ready to breakout, not one that’s ready to break down. With that in mind, we feel that buying opportunity should present themselves below, and short-term supportive candles might be the vehicle for traders to get involved to the buy side in this particular pair.

There is a massive uptrend line below, and that of course will have an influence on this market as well. With that, we feel that the market will ultimately bounce even if we do fall significantly, and with that we think that ultimately the 103 level does get broken to the upside also. A move above the 103 level has the market looking for 104, and then eventually the 105 level. It’s above there the things you truly interesting as we would more than likely head to the 110 level, albeit a longer-term type of move.

A break above the top of the shooting star almost guarantees a move to 103. Nonetheless, we are longer-term bullish on this pair, as we believe that the interest rate differential will continue to widen between the two currencies. Being that, the market looks like the bond markets will continue to push this pair in whatever direction it wants to go, and as a result money will flow to where it’s treated the past, and other words where the higher interest rates are. While there are higher interest rates in the United States the in Japan, it’s only nominally so, so it is a quite enough to get this pair moving yet. Ultimately, we do believe that the interest rates in the United States will have to continue to rise, albeit in slow-motion. With that, it’s only a matter of time for this pair really search moving to the upside.