The USD/JPY pair went back and forth during the course of the session on Monday, as the 121 level continues to be a bit of a magnet for price. Quite frankly, you can see that on this chart I have a yellow rectangle drawn. I believe this rectangle is the most important thing on this chart, as it shows that the area should continue to be very supportive, and as a result I am waiting to see whether or not get some type of supportive candle below, or perhaps a bounce that breaks well above the 121.50 level. That’s an area that is roughly the top of the range for the session on Monday, so that would show a continuation of bullish pressure.
This is of course Christmas week, so it could be a bit choppy and tight as far as trading is concerned, but ultimately I do think that we go higher. After all, the interest-rate differential continues to favor the US overall, and with that it feels as if this market should continue to go much higher.
Bank of Japan
The Bank of Japan is nowhere near raising interest rates, while the Federal Reserve may have to do so. The Final GDP numbers coming out of the United States today could be another jolt to this currency pair, and as a result this market could break out to the upside in reaction. As far as breaking down is concerned, I don’t think it’s going to happen anytime soon, as the support level at the 120.50 level more than likely extend all the way down to at least one 19, if not the 118.50 level below there. I don’t really see the strength for this market to break down, unless of course something catastrophic happens in the near term. Ultimately, this is Christmas week, so I think what we will probably see as a slow grind higher, and if you have the ability to stomach a slow-moving trade, you may find yourself buying soon.
