The USD/JPY pair has been grinding higher for some time now. However, looking at the weekly chart you can see that there is a bit of a bullish flag type pattern that has formed, and as a result it appears that this market is probably going to go higher given enough time. I believe that if we can get above the 120 handle, we will grind on our way to the 122 level. In that region, I believe the market will finally break out and be free to go much higher.
Looking at the bullish flag pattern that has formed, I think that we are looking for a move to the 135 level given enough time. I do not think that this will happen in March obviously, but I also recognize that buying is the only thing you can do in this marketplace. I simply think that selling is reckless behavior as the US dollar continues to be the favored currency around the world with perhaps the exception of the Swiss franc. It isn’t that I feel the risk appetite around the world is suddenly going to go through the roof and therefore pushes pair higher based on that, it’s just that interest-rate expectations are certainly to the upside for the US dollar, while the Japanese yen is probably years from bringing in a better yield.
With that, I believe that we are in a longer-term buy-and-hold type of scenario. If you are a longer-term trader, you almost are certainly already long of this pair. However, short-term traders will continue to buy this pair when he dips based upon value, and I believe that the 115 level is the “floor” in this market right now. With that, there’s no way to sell this market and I do believe that building a bigger position over time will be the way to go. I believe that careers will be made by this move, and only the foolish try to step in front of this uptrend and push the other direction.
