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The USD/JPY pair fell during the session on Tuesday as the 78 handle has been solidly broken. However, it does look like a little bit of support came late in the day. This particular pair is a fight between two central banks hell-bent on devaluing their currencies, and as such we think that this market will be very choppy to begin with.
We like buying supportive candles, as the Bank of Japan certainly will be working against the rise of the Yen. The daily candle for the Tuesday session does look quite a bit like a hammer, and it is sitting on top of where a massive hammer formed a couple weeks ago. This could suggest that a fairly serious amount of support is just below where we are at currently, and if that's the case we should see a pop back over the 78 handle.
This pair could continue higher to the 79 handle with relative ease as it is simply the top of the most recent yet height range that we've seen. We think that this market will continue to be very tight going forward and therefore not very appealing for anybody looking for more than a handful of pips. Because of this, we are currently flat, but we certainly want to buy once we get into the markets and not sell.