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The USD/JPY pair rose during the Tuesday session after forming a hammer on Monday, in order to show that it is still trying to build a base. The 78 handle below looks to be a bit of a "line in the sand" for the Bank of Japan, and as such we are still buying this pair. However, it seems unlikely that this pair will move suddenly, and it should be thought of more as a longer-term trade.
We think eventually this pair goes back up to retest the 80 resistance level again. It comes down to the 80 level going forward as well. Essentially, if we can get above that price, we could see an attempt to break out and head towards the 84 handle.
If we saw a break below the 78 handle, we would be more than willing to buy the very first sign of support as the Bank of Japan will more than likely intervene if price gets below that point. With this being said, this is a "buy only" pair now.