By FX Empire.com
The USD/JPY has absolutely taken off over the last several sessions, and the Friday trading day saw more of the same. The pair was trading at about 76 just three short weeks ago, and now we find the pair above the 0.81 handle. Because of this, there really shouldn’t be much of a doubt whether or not this latest surge is real. The trend in this pair could be changing, and this could make this pair a career making trade waiting to happen.
The 80 level giving way is a strong sign by the bulls, and this suggests that the pair should continue higher going forward, but the move has been so one-sided that we prefer to see some kind of pullback from which to buy. The trend has changed in our opinion, but the move needs to give way a bit so that many of the other traders out there can join in.
The next massive resistance area we see is at the 0.85 level, and as a result, we think there is plenty of room for this trade to run to the upside. The Bank of Japan is expanding its bond purchases, and this should continue to push the value of the Yen down. The pair should now be thought of as a “buy only” pair at this point, and we will look to the short-term charts for signs of support to buy. The selling of this pair cannot be done at the moment as the bullish move has been so strong. Moves like this don’t happen every day, but when they do – they mean something.
The pair will be subject to various headline shocks, but it appears that for the first time in ten years or so, the Yen is going to struggle as a result of true natural forces like lower exports and the like. Because of this, we could be at the start of another trend like we saw for a few years before the financial crisis just a few short years ago. It used to be as simple as selling Yen to make a profit. We may just be heading back into that scenario again.
USD/JPY Forecast February 27, 2012, Technical Analysis
Originally posted here
