The USD/JPY pair broke higher during the course of the day on Tuesday, breaking above the 106 level. That being the case, the market ended up pulling back though based upon the large amount of resistance above. The massive candle on Monday of course is very positive, but at the end of the day on Tuesday formed a shooting star, which of course is very bearish. However, this is not an opportunity to sell as far as we see, on the other hand it is an opportunity to wait for the pullback that should offer quite a bit of value in this marketplace as the breaking of 105 was a massive bullish sign.
The US Dollar of course is very positive overall, and the US economy certainly continues to look very strong. The Federal Reserve is getting closer and closer to tightening its monetary policy yet again, and as a result we feel that this market should be one that offers a buying opportunity closer to the 105 handle. Any supportive candle between here and there is a buying opportunity as far as we can see, and we would also by a break above the top of the shooting star as the markets would show themselves as being very positive at that point in time.
It is not until we break down below 103 that we would even consider selling this market, something that does not look very likely at this point in time. In fact, we believe that the market will eventually go to the 110 level, an area that is significantly resistive on the longer-term charts. Given enough time, we believe that the markets are going higher than that, and that we are the beginning of a longer-term move. We have no interest in selling this market again into we get below 103, and that is something that would take quite a bit of force to the downside in order to accomplish. Ultimately, we believe that the US will continue to be favored over Japan has interest rates in Japan should stay massively thin.