By FXEmpire.com
The USD/JPY pair initially rose during the week as the hammer from the previous week got triggered to the upside. This was a buy signal to most traders, but the later action in the week saw this pair fall apart. The fact that the end of the week saw both a break higher and lower, with the end of the week closing at the very lows suggests big trouble. This is a massively bearish sign to say the least.
However, the Bank of Japan will more than likely be willing to get involved if the pair falls too far. The 76 level has seen a couple of big moves higher, and this would more than likely repeat itself if the market got that low. The Bank of Japan will more than likely start talking about this pair now as it certainly looks like it has broken down, and the central bankers have to be worried at this point.
The 61.8% Fibonacci level has given way at this point, and it appears that the uptrend form the start of the year is all but dead. However, there will be serious intervention risks as we drop, and there should be more easing at one point or another. The Wednesday session sees a Bank of Japan meeting, and this will more than likely be a great chance to see some kind of statement about the rate of the Yen against the Dollar, or some other potentially market moving event like an expansion of easing programs – even though the market is starting to price this possibility out. The Bank of Japan is more than likely discussing this pair at the moment, and it certainly wants to see the Dollar gain in value as Japan exports so much to America.
The 78 level is the next support area, and approaches the area that the BoJ is known to have intervened in. Because of this, we cannot sell at this point, and are going to wait to see some kind of supportive candle again from which to buy. Otherwise, we are very flat of this market.
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Originally posted here
