USD/JPY Forecast August 6, 2012, Technical Analysis

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The USD/JPY pair had a bullish session on Friday as the US employment numbers came out at 165,000 jobs added for last month. The pair did Spike above the 78.60 level that we have been watching as resistance lately, and as such will have triggered buy orders. Looking at the longer-term charts, we actually formed a second hammer in a row so this gives us even more bullish feelings about this pair.

Adding to all of this is the fact that the Bank of Japan has been very supportive of this currency pair, and we feel that the 78 handle is a bit of a “line in the sand” for that central bank. This pair acted like it previously did during Friday, meaning that it’s acted positively with positive news.

We think that a move above the Friday highs should send this pair looking for the 80 handle before it’s all said and done. Also, it can be said that this pair could be bought every time we get close to the 78 handle. Granted, it could fall below there but we have to feel that the central bank is more than likely they get involved if we get below that level for too long.

Looking forward, the 80 handle should be pretty significant as far as resistance is concerned, but the 80.60 level is just above as well and that’s when things get interesting. If we can get above that level, we feel that 84 will be the next target and then possibly we would turn into a long-term buy-and-hold situation. While many of you may not remember this that was the way things were for several years. You simply bond the Dollar, and sold the Yen. This was known as the “carry trade”, and it made a lot of traders very wealthy a few years back. Seeing the action on Friday was like going back in time to the year 2005. If we can get above that 80.60 level, and more importantly the 84 handle, we feel that will be the norm again.

We can also feel confident buying this pair under the 78 handle on supportive candles, as it would only be a matter time before the Bank of Japan got involved. When the Bank of Japan gets involved, massive intervention is normally the reaction they go with. Needless to say, we are not selling this pair under any circumstances.

USD/JPY Forecast August 6, 2012, Technical Analysis

USD/JPY Forecast August 6, 2012, Technical Analysis

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About:FX Empire Analyst - Christopher Lewis

Christopher is a part of the FXEmpire.com analysis team. He writes Forex and Commodities technical analyses on daily and weekly basis. Christopher writes his analyses in a professional and yet simple to understand manner. His analyses are available in both text and videos.

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