By FX Empire.com
USD/JPY rose during the week, and finally smashed through the 80 level as the Bank of Japan has expanded its bond buyback program in order to float Yen into the system. The devaluing of the Yen is something that the BoJ has wanted to do for a long time, but the recent action seems to have really got the market moving. The breaking of the 80 level suggests that the move is real now.
The Bank of Japan certainly won’t step in the way, and there is even some chatter that they may intervene while the market is moving in their favor to finally put a “nail in the coffin” of the Yen buying going forward. The Bank has shown in the past (90s) that they are willing to intervene over and over in order to push the pair back up. With this in mind, it is very possible that a sudden fall could be worked against as well.
The next massive resistance area is at the 0.85 level as far as we can see on the charts. The area we are in at the moment is fairly resistive as well, but the recent move suggests that the move is real, and any pushback that the resistance area around the 81.20 level gives will more than likely just be a buying opportunity. This will be especially true if the 80 can hold as support at this point.
We like the idea of buying pullbacks, and then adding on dips at this point in time. The pair looks like it wants to head to the 0.85 level and beyond. Because of this, we are thinking of having a running long position in this pair as long as we stay somewhat positive. The recent move has been strong, so the pullback would be welcomed, and could be used as an opportunity to get involved as the market has ran so far so quickly. With all of this in mind, we are not selling at this point as the market looks like it is in the middle of changing its dynamics.
USD/JPY Forecast for the Week of February 27, 2012, Technical Analysis
Originally posted here
