By: Christopher Lewis
USD/JPY has been acting like it was shot out of a cannon lately, blasting through various resistance areas with impunity. The recent break of the 80 level was one of the biggest moves in the Forex markets that we have seen in some time, and certainly has gotten the attention of the traders around the world, and it now has become a game of “self-fulfilling” prophecy.
The Bank of Japan is now stepping up its bond buying program of JGBs, or Japanese Government Bonds to essentially pick up the slack for a Japanese public that is decreasing in size to help absorb the 200% debt to GDP the country currently has. The continued flooding of the markets with Yen should push this pair higher and higher. Also, the US economy is showing signs of life while many of the major ones aren’t. This should also help keep this market afloat.
Trend change
As long as the market stays above the 80 handle, I am prepared to only be long of this pair. I think the weekly trend line that we saw broken was the start of the trend change, the moving averages are all starting to point up as well, and the 80 giving way is important. All of this combined leads me to believe that the pair is going to rise for months, if not years.
The pair has slowed down a bit over the last couple of sessions, but hasn’t exactly fallen back much. There really isn’t much of a pullback, and we may only get a sideways consolidation, which would only show how strong this move really is. The 85 above looks like it will be a bit of resistance, and it is the 50% Fibonacci level from the most recent drop in the market, but I truly believe the writing is on the wall, and that level gives way eventually.
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My strategy for this pair is to continue to add as I am long already. Each pullback seems like a buying opportunity to me, and I am especially interested in shorter term supportive candles on the 4 hour chart. I will continue to do this until we get below 80, and if we don’t I will be building a massive position over the next several months.