USD/JPY Forecast for the week of December 10, 2012, Technical Analysis

The USD/JPY pair fell during most of the previous five sessions as the markets rocked back and forth. However, we did get a bit of a bounce off of the 82 handle and as a result have formed a hammer for the second week in a row. With the December 16 election in Japan looking more and more like a win for the opposition, the reality of the Bank of Japan printing “unlimited Yen” could very well be coming soon. As markets try to get ahead of these types of moves, it does not surprise us that we are seeing a significant amount of support at this level.

However, we see the 84 level as being significantly resistive and would be a trigger point for a longer-term buy-and-hold type situation. With the current situation that, we see this as a “buying only” type of market, and will buy pullbacks expecting to eventually see a breakout above 84.