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The USD/JPY pair initially surge during the week, even breaking the 79 handle. However, by the end of the find days we saw a shooting star form just above the 78 handle. With this in mind, we think that the conflicting hammer and shooting star from the last two weeks suggests that we will see a lot of consolidation right around the 78 level.
This area has been suspended recently by the Bank of Japan, and it is also a major support and resistance level. With this in mind, we think this pair will essentially go nowhere quick over the short-term. On a break of the top of the shooting star however, we think this would be a good sign as the market could at that point finally break out above the 80 handle. In the meantime, this is not a long-term trader’s market.