The USD/JPY pair fell significantly during the day on Monday, testing the 118.50 level. However, we did bounce enough to turn things back around and form a bit of a hammer for the daily candle. That of course is a very bullish sign, and as a result it’s very possible that the 118.50 continues offer massive support going forward. At least that’s how I’m looking at this market right now.
As I look at the market, I zoom into the one-hour chart and see that we have formed a bit of resistance and trying to pull back. However, I believe that the 118.50 level should continue to offer plenty of support, and as a result I look for support to start taking this market up to about 120.25 or so, as it is the next major resistance barrier on the shorter-term charts. However, if we did pullback below the 118.50 level, I think this market could fall to the 160 level rather rapidly.
