USD/JPY fell again on Thursday as traders prepare for the Non-Farm Payroll number today. The market almost always will react in violent moves to this announcement, and this pair is no different. The levels we are approaching though - they suggest only one way to trade.

The pair is to be bought only, as the Bank of Japan is sitting just below where we are at the moment, and intervention is certainly something they aren't afraid of doing. The strong Yen has been making it tough on the Japanese economy for some time now, and with the rest of the world showing signs of slowing down, those Japanese products that the country depends on exporting certainly cannot be overly expensive. With this in mind, the central bank and major exporters are all trying to fight Yen strength.

The recent action has been a sudden drop, followed by several supportive hammers in a row. This suggests that either we are approaching strong order sizes, or the market is leery of the area we are in. (They should be.) The central bank is also starting to talk about intervention as well, and this normally starts just about a week or two before action.

The Non-Farm Payroll number will move the market, but we certainly cannot sell now. The pair could be bought on a dip, and any negative knee-jerk reaction is almost an invitation to go long and watch the Bank of Japan intervene. It should be noted though, that the BoJ typically does these interventions on Monday morning in Asia, when the markets are very quiet. If there is a bad reaction to the NFP today, the central bank may not get involved until then.

We would also be interested in buying if the market can break above the 76.50 level again, and prove it as supportive. However, this probably wouldn't be accomplished in a single session, so this buy trigger wouldn't be obvious until sometime next week. The pair could pop back up to the 78 area, and this is our target as soon as we get some kind of buy signal - or sell off to fade.

USD/JPY

USD/JPY Forecast February 3, 2012, Technical Analysis

USD/JPY Pivot Points (Time Frame: 1 Day)

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
75.8453
75.9452
76.0703
76.1702
76.2953
76.3952
76.5203

 Fibonacci
75.9452
76.0311
76.0842
76.1702
76.2561
76.3092
76.3952

 Camarilla
76.1336
76.1543
76.1749
76.1702
76.2161
76.2368
76.2574

 Woodie's
-
75.9515
76.0830
76.1765
76.3080
76.4015
-

 DeMark's
-
-
76.3452
76.1951
76.1202
-
-