USD/JPY rose for the session, but gave up almost all of the gains by the time the session ended on Monday. The 77 level proved as strong resistance, and this shouldn't have been a surprise as both the trend is down, and the area was once significant consolidation.
The candle shape for the session in a shooting star, and this will of course signal bearishness going forward. However, the pair is currently one that is being manipulated by the Bank of Japan as that central bank has been intervening recently. The moves have happened in the general area that we are sitting in where the interventions have happened.
The Bank of Japan has just recently started making comments about the value of the Yen, and this is normally the first step in their process of intervention. They always seem to try and talk the markets down first, and then when that doesn't work - the sell the Yen in massive amounts. So while the set up looks good for a sale at this point, this isn't the pair you want to sell. The market simply isn't a free one, and as a result it can't be traded as such.
The 7650 area is just below, and the level has been a support area as of late, therefore it isn't too much to think that it will cause a reaction. In this case, the former support should be resistance. However, as we stated above - you simply cannot sell. In fact, we are looking for a reason to buy this pair at the moment. The lower we go, the more likely we are to buy as the BoJ will have to step in sooner or later. The interventions almost always happen at the Asian open, so we will be quite comfortable opening our position based upon a daily close candle (GMT, or thereabouts.) that shows support in this pair. The 75.50 level was the actual point that triggered the BoJ to step in last time, and the close we get to that mark - thew more likely a move will be made in our opinion.
USD/JPY Forecast February 7, 2012, Technical Analysis
USD/JPY Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3