It's pretty rare that I get to say something like "This currency pair looks absolutely horrible, get ready to buy it!" However, this is exactly what the USD/JPY looks like right now to me. As odd as it sounds, there is a reason to my logic.
As you can see by the charts, the 78 handle has been an obvious support level on several occasions. When you zoom out, you can see that it was massive resistance for weeks upon weeks as we bounced around at the lows. Recently, the Bank of Japan admitted that they were clandestinely intervening in this currency pair. This was just after a bounce off the 78 handle, and we are starting to see some members of the Bank of Japan jawbone a bit out there. This is not a call when students in my opinion.
But Chris, it's a shooting star!
Yes, I see the fact that this continuation shooting star has formed. I also see the fact that the 78 handle is just below it, and it looks like support getting ready to break. Ironically, I find myself cheering on this exact move. This is because I believe the Bank of Japan will certainly get involved if we get a sustained move below this level.
I see the 78 level as a great place to buy supportive candles. However, I see an even better opportunity below that area as the central bank will certainly act. I am now looking for supportive candles from which to buy the Dollar against the Yen. I very rarely trade countertrend, but this is an exception as I have a central bank backstopping my orders.
From a longer-term perspective, any move higher should look for the 80 handle. If we can get above 80.60, we should see the 84 handle before it's all said and done. Beyond that, and were talking a long-term buy-and-hold trade that will run for months, if not years. Because of this, I am well aware that the risk to reward ratio is extremely high for this pair, and am presently looking for some type of supportive action from which to get involved from the long side.