USD/JPY Daily Outlook- May 2, 2014

Christopher Lewis

The USD/JPY pair fell initially during the session on Thursday, but as you can see we bounced off of the 102 level in order to form a little bit of a hammer. That hammer suggests that we are going to go higher, but with today being nonfarm payroll Friday, there’s a good chance that we will see an extreme amount of volatility in this marketplace. In fact, the USD/JPY pair is one of the most sensitive to this announcement as Federal Reserve policy is highly dependent on employment numbers.

Any pullback at this point time will have to tangle with the uptrend line, which I have plummeted on this chart from some time ago. The 101.50 level below is also supportive, as we have bounced off of it several times as well. Because of this, I feel that there’s far too much in the way of support in this market to start shorting it. In fact, if we sell off due to the announcement, I will be looking for the first sign to start buying this pair. That means of course short-term supportive candles.

103 could be a bit of a problem.

The 103 level above could be a bit of resistance, but until we get above there we think that the choppiness will essentially build up enough momentum to breakout to the upside. If we go down to the 101.50 level, I would be all over a supportive candle as well. A break above the 103 level has the market heading to the 104 level relatively quickly, and then above there we would probably head to the 105 level. I ultimately believe that we break above the 105 level, and head towards the 110 level. That’s a longer-term target of course, but at the end of the day I feel that it’s something that somewhat inevitable as the Japanese yen has been sold off against many other currencies. As a bit of a disclaimer, I am short of the Japanese yen against the Turkish lira and other higher yielding currencies. I feel that it’s only a matter of time that this pair follows those markets.

USDJPY Daily 5214

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.

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