USD/JPY is one of the most interesting Forex pairs to me right now. This is simply because we have a central bank, the Bank of Japan that is very active in this pair, and perhaps already intervening. While they haven't admitted to it recently, it was just a couple months ago that they did in fact admit to clandestinely intervening.
Add that kind of entry with the fact that the 78 handle seems to be a massive brick wall that the sellers can't chew through right now and looks suspiciously like a place that the central bank could be involved. Because of this, I have not been able to sell this pair, even though there are some pundits up talking about how the Bank of Japan can't prevent the appreciation of the Yen.
This could be true in the long run, but the truth is I don't want to be on the wrong side of a central bank intervention. Because of this, I have absolutely refused to sell this pair, and it looks like it's finally starting to perk up.
The 78.75 level was an area that I have been wanting for quite some time in order to start buying this pair again. This would show a breakout of sorts, and more than likely clear the way to reach the 80 handle. The pair will run into quite a bit of resistance at 80, but the fact that the Wednesday session produced a hammer that is sitting just on top of the previous consolidation area gives me hope that we can get a nice pop in this pair now.
The 80 handle could give way, and this would have us running towards the 80.60 level. If this area gives way next, we could really see this pair perk up and challenge as high as the 84 handle. Of course, if we get above that this suddenly becomes a buy-and-hold situation.
However, we are far from that and I am willing to take this trade as it comes. Long-term, I do believe that this pair will rise over time. The Federal Reserve is more likely to disappoint than overwhelmed with its monetary easing policy, and as a result this will become a one-way trade eventually. Currently, I can only sit and wait.