USD/JPY Daily Outlook- May 6, 2014

Christopher Lewis

 

The USD/JPY pair fell initially during the session on Monday, but found enough support below to turn things background inform a hammer. This hammer of course does signify strength, and as a result I believe that this market will continue to stay somewhat afloat. Also, you will notice on my chart that there is an uptrend line that we are not to awfully far from, and I believe that will continue to influence the market to the upside as well. With that, I find it almost impossible to sell this pair, especially considering that the 101.50 level has been so supportive.

Going forward though, I recognize that the 103 level is rather resistive, and as a result will be difficult to overcome. Regardless, I have a longer-term outlook on this pair that is very bullish, especially when you look at the interest rate differentials between Washington and Tokyo. Because of this, I have no interest in selling no matter what.

Long-term uptrend forming?

The recent action that we see them the USD/JPY pair looks a whole I like the 1995 turnaround to me. Because of this, I believe that ultimately we will see a longer-term uptrend form, and ultimately break through the 105 level, which I see is a massive barrier to that uptrend expanding. Going forward, I believe that this will be much like the carry trade of years ago, as this pair simply is a “buy on the dips” type of market. I ultimately believe that this will be a career making trade eventually, but right now we are simply meandering around trying to figure out what we’re going to do next. Ultimately, the Bank of Japan will get its wish of a weaker Yen, and that will be a great trading opportunity.

Selling at this point in time is absolutely impossible to me, as I see far too many reasons to not do so. I believe that the 101.50 level will be a bit of a “floor” in this marketplace, and therefore I am “buy only” until we are well below the 101 handle.

USDJPY Daily 5614

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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