The USD/JPY pair broke much higher during the day on Tuesday, breaking above the 105 level. That was an area that should have been massively resistive, so it doesn’t surprise me that we pull back a little bit. At the end of the day though, I do think that we are breaking out and I have been bullish of this market for quite some time. I believe that the market will ultimately go to the 110 level, but it is going to take a significant amount of momentum to do that.
That being the case, I feel that any pullback at this point in time should be an opportunity to buy this market as it is so bullish. I see the 104 level as been massively supportive, and any supportive candle below here would have me interested in going long. However, I would be just as interested in going long if we broke the top of the range for the session on Tuesday as well.
Interest-rate differential driving this market.
The interest-rate differential between the US and Japanese bonds will continue to drive this market. This market is very sensitive to interest-rate expectations, and as most people anticipate that the Federal Reserve will continue to cut back on quantitative easing, it makes sense that this market continues to go higher. On top of that, the US economy is just simply stronger than almost all other major economies as well.
I believe that there is massive support all the way down to the 103 level, so there is no interest on my part for selling this market. I believe that the pair will continue to go higher, but it will of course be relatively choppy. Every time this pair pulls back, there will be buying pressure in my estimation, therefore making this a market that you can return to again and again. Short-term charts will probably be best, perhaps hourly ones, in order to find buying opportunities. I have no interest in selling, and believe that this is the beginning of a multi-year move.
