The EUR/JPY pair fell during the session on Monday, but as you can see bounced quite a bit by the end of the day in order to form a hammer. This hammer of course is focused on the 132 handle, and as a result looks like we are ready to continue going higher. With that in mind, a break of the highest from the Monday session is indeed a buy signal, and one that I fully intend on taking.
Going forward, we have to look at the past. We have recently broken out of an ascending triangle that measures roughly 600 pips, and as a result should see 600 pips from the breakout point at the 131 handle. In other words, the 137 handle should be targeted eventually. This will necessarily happen overnight, but the way that the yen related pairs have moved recently, it probably won't take that long.
If the Euro gets a bounce, this could really take off.
Watch the EUR/USD pair as well. If that pair starts to take off, and breaks above the 1.30 handle, we could see a significant move in this pair as the Yen continues the selloff, and the underlying strength of the Euro could really get this thing moving. In fact, that wouldn't surprise me at all, and I believe it is more than likely going to happen.
As far as selling this pair is concerned, there is obviously no way to do so. The Bank of Japan has made it abundantly clear that they are willing to work against the value of the Yen going forward, and as a result selling is not even a thought. On the other hand, if we do pullback I believe that we will see 130 as a "floor" in this marketplace going forward and anything near that more than likely should offer an excellent buying opportunity. We will see pullbacks from time to time, but I think we will not see this pair and the 120s anytime soon, and that the area will end up being a distant memory.
