The USD/JPY pair fell during the session on Tuesday, proving that it does in fact have to obey the laws of gravity like everyone else. Lately, any pair that is Yen related has been a straight shot against the Japanese currency. However, nothing goes in a straight line, and a pullback is desperately needed.
Don't get me wrong, I am wildly bullish of this pair and everything else that is XXX/JPY. However, most of these pairs are simply overextended at this point and need to pullback in order to attract new buyers. A lot of the move that would have been based upon short covering in reaction to the election of Shinzo Abe as Primed Minister of Japan, and potential pressure put upon the central bank in that country by him.
Now that some time has gone by, he has been very vocal about the need to weaken the Again, and it is now unknown quantity in the marketplace. Perhaps it is because of this that a lot of the momentum players may be getting ready to pull out of this market. Also, the 90 handle just above should be disregarded as well as it should be significant resistance.
85
I would absolutely love to see a pullback to the 85 handle. However, we probably won't see that anytime soon, and I will have to get back into this marketplace on some type of supportive candle between here and there. Any type of hammer, long green candle, or significant bounce at this point time after a fall would be reason enough to go long.
If we managed to close above the 90 handle on the daily chart, I would have to admit that the momentum is picking back up and we are going higher before falling. Although this is my least favorite way to play this pair right now, I would have to do it if the situation arises as I believe that we will eventually see 100 during the next 12 months. As for selling, it's obvious that it's not even the choice at this point in time.