The USD/JPY pair initially fell during the course of the session on Monday, but as you can see found enough support at the 121 level to turn things back around to form a hammer. By doing so, it looks like the market is ready to continue trying to build up enough momentum to break out to the upside. If we can do that, I believe that this market will then break above the 122 level, and then head to the 125 level given enough time. There is plenty of support below, so therefore we have no interest in selling because there is so much in the way of support at various levels, but the 120 level is the most obvious area for us.
I believe that ultimately this pair continues to go much higher, offering a bit of a “buy-and-hold” type of market. I think that’s eventually what’s going to happen, so the great deal of profits will probably be made building a large core position over time, adding every time the market drops in order to pick up value.
Ultimately, I think 125 is the next target
I believe that the next target is 125, and that we will get there given enough time. It will probably be choppy between here and there, but at the end of the day the market is bullish overall. The US dollar of course continues to be the favored currency around the world, while the Japanese yen is being worked against by its own central bank. With the ultra-loose monetary policy that the Bank of Japan continues to hang onto, it’s very likely that the Japanese yen will continue to fall in value overall, and in this particular case it is a bit of a perfect storm. Ultimately, the market should continue to go higher over the next couple of years, as the two central banks are on such wildly divergent paths. With fact, I believe that there is a lot of money to be made here.
