The USD/JPY pair reacted positively at first during the session on Friday, as the nonfarm payroll numbers came out much better than anticipated originally. However, the 103 level has offered quite a bit of resistance, and as a result the market turned back around and formed a massive shooting star. However, we think that this market will ultimately find buyers below, based upon the longer-term uptrend line. With that being the case, we feel that the market is a “buy only” type of market, and supportive candles below will be reason enough to get bullish.
We think that a break above the 103 level will eventually happen, and when it does the market will go looking for the 104 level. Above there, we think that the market heads to the 105 handle, which has been a target for some time. A move above there is what we actually anticipate by the end of the year, as the market should go looking for 110, but we recognize that there is a lot of noise between here and that move, so it’s possible that we may have a lot of shorter-term setups between now and then.
Regardless, we are not selling under any circumstances, and do believe that the 101.50 level will be the “floor” in this market. We would be very interested in supportive action down there, as it has been so strong for support recently. Because of this, we feel that the market will continue to support the US dollar against the Japanese yen and the Bank of Japan working against the value of the Yen should make this market a bit of a “one-way trade.” Don’t get us wrong, it’s not that it’s going to be easy to trade all of time, but we will only buy as we see far too many barriers to breaking down at this point in time. Short-term traders should continue to like this market, as there should be plenty of opportunities over the course of the next several handles on our way to much higher level.