The USD/JPY pair initially fell during the session on Thursday, but as you can see ended up shooting straight up in the air and having decent gains. The market of course has a significant amount of support down near the 101 level, so the fact that we bounced in this general vicinity really isn’t that big of a surprise to me, as I can certainly see where the buyers would be tempted to get involved. The overall consolidation area of course has been very strong and has been in a fact all year, so quite frankly I’ve been looking to go long of this market for a while now, as most of you probably have been.
I believe that pullbacks at this point in time should be nice buying opportunities, as we will see more and more support come into play. I think that the market is heading to the 102 level, but quite frankly I think we go beyond that and head towards the 103 level which is closer to the top of the consolidation area. If we can get above there, then we will finally break out and the market will move much higher. I do believe that’s going to happen sooner or later, but it’s probably going to be a while before that happens.
As far as this market is concerned, I am essentially “buy only” because I feel that the market will eventually break out to the upside as the Bank of Japan continues it’s very loose monetary policy, and perhaps add to it in the future. On the other hand, you have the Federal Reserve which is starting to taper off of monetary policy, but it should be noted that Janet Yellen has recently suggested that perhaps the Federal Reserve will still have to support the economy after recovery begins. Because of this, I feel that the market will ultimately break higher, but we really might have a fight on her hands between now and then. Pullbacks should continue to offer buying opportunities and if you can put up with volatility, I believe that there will be plenty of province to be had in this market. On top of that, I see a significant amount support from the 101 level all the way down to the 100 level, so quite frankly I think it’s only a matter of time, but the question is whether or not you can hang on?