The USD/JPY pair initially rallied during the session on Thursday, but as it reach towards the 124 level, it found enough resistance there to turn back around and formed a bit of a shooting star. Because of this, the market looks like it is going to continue to fall from here but I think that there is enough bullish pressure below to turn the market back around. The 121 level below should be massively supportive. That thesis is what drives me to want to buy this pair on a short-term bounce. I believe that a supportive candle below will be the catalyst to start buying.
The University of Michigan Consumer Sentiment numbers come out during the session today, as well as the Core PPI numbers and the PPI month over month numbers out of the United States. With that, I believe that the stock markets will move, and that will of course move this pair as it seems to be very risk sensitive.
Buying at dips
Looking at this market, I believe that the dips will continue to be value in the US dollar as the interest-rate differential will continue to expand. Don’t get me wrong, there will be pullbacks and there will be violent falls at times, but ultimately I believe that the longer-term trend will be to the upside and down the breaking of the 125 level was the initial “shot across the bow” at the sellers.
Ultimately, I believe that supportive candles will appear, and that they will be picked up by the majority of traders that I know. If we can break out to a fresh, new high, I would not only be positive of this market, but I would be adding to the position time and time again. I have no interest in selling this market, because even if we broke down below the 121 handle, I see a lot of noise all the way down to the 119 area. With that, I approached the market with cautious optimism.
