USD/JPY Forecast October 3, 2014, Technical Analysis

The USD/JPY pair initially tried to rally during the session on Thursday, but turned back around to form a fairly negative candle. However, we are just above the 108 level, and the fact that today is nonfarm payroll Friday is in exactly lost on highs. If the jobs number is better than anticipated, this pair could head back towards the 110 level. If we can get above there on a daily chart, we believe that this pair will break out and had much higher, probably to the 115 level given enough time.

On the other hand, we could have a little bit of a pullback in this area, and if we do get that we are more than happy to start buying on signs of support. We see potential supportive areas at the 108 level, the 107 level, and most certainly the 105 level. After all, once we broke out above the 105 level, we ended up having a significant amount of bullish pressure on the breakout, which of course was shown to be significant and important.

The 105 level is the “floor” as far as we can see, and as a result we have no interest whatsoever in selling this market. If we were to break down below there, it would change everything but at this point time it doesn’t make any sense. After all, the Bank of Japan is alter easy with its monetary policy, and could possibly go even easier. On the other side the Pacific, the Federal Reserve looks ready to cut back on quantitative easing completely, and that of course is the same thing as tightening monetary policy. The interest-rate differential in the bond markets will continue to drive the US dollar higher, and making the currency strengthen against the Japanese yen.

We believe that we are in the beginning of a multitier uptrend, and that the market will be one that you can buy every time it pulls back. In fact, it’s probably best traded as an investment and less a trade, simply adding a little bit as we continue to go higher and higher.