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USD/JPY forecast for the week of October 6, 2014, Technical Analysis

By:
Christopher Lewis
Updated: Aug 24, 2015, 22:00 UTC

The USD/JPY pair fell to the 108 level during the course of the week, but then bounced enough to form a hammer. The hammer of course is a very bullish

USD/JPY forecast for the week of October 6, 2014, Technical Analysis

The USD/JPY pair fell to the 108 level during the course of the week, but then bounced enough to form a hammer. The hammer of course is a very bullish sign, and as a result we feel that this market is going to continue going higher. On top of that, the Bank of Japan continues its ultra-easy monetary policy, which of course will ring down the value of the Japanese yen overall. On the other side the Pacific, we have the Federal Reserve and the tightening of monetary policy via tapering off of quantitative easing, which of course should bring up the value the US dollar.

Ultimately, the US economy is doing better than most other economies, and the employment numbers coming out stronger than anticipated during the session on Friday of course helps too. With that, we believe that the US dollar will continue to strengthen against the Japanese yen, and that we will eventually break above the 110 level. This hammer is just simply the most recent sign that the market is ready to go higher, and we believe that we will eventually hit the 115 level.

Any pullback from here should continue to attract buyers, and we believe that the 105 level is the “floor” in this marketplace. Ultimately, the market will more than likely find buyers every time it falls based upon value, and we have no scenario right now where we would consider selling. Even if we fell below the 105 level, the truth is that there is so much noise underneath that level that we think it’s almost impossible to sell even down there.

We believe that the 115 level is the target by the end of the year, and judging by the way this market has moved recently, that could happen even quicker than that. We have no interest in selling because we recognize that money not only is flowing away from Japan, but it is also flowing into the US stock markets. Ultimately, this could be one of those career making trading situations as people simply buy-and-hold.

 

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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