The USD/JPY initially rose during the Wednesday session, but by the end of the session the pair had fallen back down to form a shooting star. The bearish candle could signal a retrace coming, but the fact is that just two sessions ago the market formed a hammer, so this may be more of a sign of consolidation to come.

If this is indeed true, this would be a massively bullish sign as the markets have risen so far that a pullback would have been almost a given. When a trend changes like this one has, and we are only seeing consolidation like we did just above the 80 handle, that is extremely bullish. Perhaps we are seeing the same thing now that we are above the 83 handle.

The Bank of Japan continues to buy JGBs, and this is essentially the same thing as printing Yen. The flooding of the market with Yen can only bring the value of the Japanese currency over the long run. The pair could run into a bump here, but the 85 level seems almost a given at this point.

The shooting star does suggest that the 84 level is going to be tough to crack, but it is hard to imagine anyone out there that doesn't see that the pair is certainly changing its overall feel. This should make the seller nervous, and as a result we may see a breaking of the 85 level much easier than we would have thought. The Dollar will more than likely be the safety trade that traders prefer in general, so this will put a bit of a bid in this pair going forward anyway.

The breaking of the top of the Wednesday session highs would be a massively bullish sign at this point, and as such we would be adding to our long position if that happens. As for pullbacks, if we get one we will treat it as a buying opportunity on the first sign of support on the daily close, preferably at a large round number.

USD/JPY

USD/JPY Forecast March 22, 2012, Technical Analysis

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

 Name  S3  S2  S1  Pivot  R1  R2  R3

 Classic
81.9850
82.5625
82.9460
83.5235
83.9070
84.4845
84.8680

 Fibonacci
82.5625
82.9296
83.1564
83.5235
83.8906
84.1174
84.4845

 Camarilla
83.0652
83.1533
83.2414
83.5235
83.4176
83.5057
83.5938

 Woodie's
-
82.5140
82.8490
83.4750
83.8100
84.4360
-

 DeMark's
-
-
83.7152
83.4276
82.7542
-
-