The EUR/JPY pair fell during the beginning part of the session on Thursday, but as you can see got a bit of support just above the 133 handle in order to bounce and form a hammer. This is of course a bullish sign, and as a result I think that this market is going to continue higher. After all, we have formed three hammers in a row and as a result it certainly looks like support is coming back into the marketplace and is ready to push his market much higher. Because of this, I feel that this market will almost without a doubt hit the 135 handle in the very short term.
I don't see any possibility whatsoever of selling this market, and as a result I think that the 133 handle is now going to act as massively supportive. Because of this, I feel very confident this market will continue higher, especially considering how well the Euro is going in general. In fact, this probably has less to do with the Yen and more to do with the Euro, especially as it relates to the explosive move higher against the Dollar.
Remember, this is a risk appetite influenced currency pair.
As the markets celebrated the fact that the Federal Reserve may not be able to taper off of quantitative easing, the "risk on" attitude of the markets trickled through all financial instruments on Thursday. Stock indices in the United States shot straight up, and as a result traders felt the need to take more and more risk. Because of that, it does not surprise me that this pair rose.
Ultimately, I think the 135 level gets broken through as well, and we eventually hit the 140 level. I have reason to believe that the market will go straight up, and I think going forward most pullbacks will be looked at as buying opportunities. As for selling is concerned, I really don't see any possibility of that until we are well below the 130 handle, something that seems almost impossible at this point.
