By FXEmpire.com
The USD/JPY pair has been one that has moved the most over the last couple of months. The pair broke out above the 80 handle back in January, and the pair still looks like there is some life in the bullish side as the weekly chart looks to be setting up for another big move.
The Bank of Japan is working against the value of the Yen, and has expanded the asset purchase program that they are involved in by ten trillion over the last couple of weeks. The program is used to buy Japanese Government Bonds, REITS, and ETFs. The central bank buying these assets essentially floods the markets with Yen out of “thin air”. This should drive the value of the Yen down over time, or at least this was the theory.
During the same time period, the Federal Reserve Chairman Ben Bernanke suggested that the Fed still has tools to accommodate if the economy warrants it. This has been read by the markets as an opening for quantitative easing, and this drove the value of the Dollar down. The pair has fallen as a result, but we are finally seeing some serious signs of support.
The area that we are in at the moment, the 80 handle, is a major spot in this market. The candle for the week is a hammer, and it simply couldn’t be at a better spot from what we can see. The area is also home to the 50% Fibonacci level as well. Needless to say, this will attract the Fibonacci traders out there, and the 200 day exponential moving average is just below current prices on the daily chart – a favorite indicator of trend traders. There are a lot of things going on at once here, and as a result we see serious potential for a big move. A break above the top of the weekly hammers has us buying this market for a move to at least 84. The selling of this market isn’t interesting to us as the Bank of Japan could be tempted to get involved below this area.
Click here a current USD/JPY Chart.
Originally posted here
