Tim LuCarelli / FXAddicts.com
Buy or Sell: Buy
Range: 81.30 to 81.50
[caption id="attachment_35144" align="aligncenter" width="1024"] Daily chart of the USD/JPY with Stochastics set at 12-3-3 and Ichimoku set at 3-1-51.[/caption]
Tuesday’s close of 82.15 is part of a continued bull flag that should drop prices back to the 81.50 to 81.30 area with the outside risk of further deterioration to the 81.03 area. When the market drops below the 81.50 mark we will start our programs buying at strategic intervals in the 1 minute time frame. Our stops will be below 80.60 with 51 pip profit orders on each entry.
Over the past year this market has broken out of its four year downtrend and then tested its lows signaling a solid bottom that should last for many years. The market is in the midst of breaking out of this two year bottoming pattern with the potential onset of many years of upward momentum.
Fundamentally, the US has become the better of two countries economically and once Congress fixes the fiscal cliff there will be no more roadblocks to damage the Greenback. On the other side of the Pacific is a changing of the political guard due to take place the middle of December. Additionally, Japan is clearly slowing economically and shows very little potential to end their 20+ year sluggish growth scenario. Rumors have been flying that the Bank of Japan will be the first central bank to go to negative interest rates. This type of monetary action has never been tested so the consequences are truly unknown. Fear of this happening and of the unknown consequences will drive the Yen value lower over the long term.