Continues to See Buyers as it Races Higher

If the trend continues, the currency could rise to the ¥150 level, but if it were to break down from here, it will need to drop below ¥130 before shorting becomes a possibility. 

• On Friday, the USD/JPY demonstrated a strong performance, breaking through the resistance level of ¥135.
• The currency pair has been edging higher, and it seems likely that it will continue to go up eventually.
• However, there is significant resistance above, particularly near the ¥137.50 level, which could potentially hold back further gains.

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Nonetheless, if the market can surpass that level, it may signal a “buy-and-hold” opportunity for traders. Nevertheless, some investors may take a cautious approach and wait for a short-term pullback to enter the market. While such a pullback would make sense, it could present a buying opportunity for those interested in entering the market.

The 200-Day EMA indicators, which reflect the 200-day exponential moving average of the currency pair, suggest that there will continue to be buyers in the market, which should support further price increases. Moreover, there is evidence of a double bottom at multiple points, which indicates a significant level of support.

In addition to these technical factors, market participants are also considering the fundamental forces that are driving the exchange rate. One of the most significant factors is the Bank of Japan’s yield control policy, which has been reiterated recently. Essentially, this policy entails the central bank maintaining a target interest rate and intervening in the bond market to keep rates in line with that target.

This policy has significant implications for the yen’s value, as the Bank of Japan will need to print more yen to buy bonds, driving down the interest rate and weakening the currency. As such, it is likely that the market will continue to work against the Japanese yen in the near term, which should support further gains for the US dollar.

Given these factors, it makes sense to use a “buy on the dip” approach, meaning that traders should consider buying when prices decline temporarily before resuming their upward trend. The recent candlestick pattern is a positive sign for the bulls and indicates that the market may be poised for further gains.

If the trend continues, the currency could rise to the ¥150 level, but if it were to break down from here, it will need to drop below ¥130 before shorting becomes a possibility. For now, the market seems to be bullish, and you should keep a close eye on the resistance levels above to see if the currency pair can make a sustained break higher.
Potential signal: On a pullback to the 135 area, potential buying opportunities arise. A stop at 133.85, with a target of 137 makes a lot of sense.