USD/JPY Forecast January 5, 2017, Technical Analysis

The US dollar fell slightly against the Japanese yen during the day on Wednesday, but we are still very much in an uptrend and have only recently been consolidating. Looking at the chart, I recognize the 115 level as being supportive, and with that being the case I am willing to buy pullbacks. I believe that a supportive candle just above the 115 level is optimal as far as buying is concerned, but I also recognize we may not get all the way down there. I certainly have no interest in selling, and believe that supportive candles are going to continue to be buying opportunities as the USD/JPY pair will try to get to the 120 handle.
With the Federal Reserve raising interest rates recently, that’s put a bit of a turbocharging the move higher, and of course you have to keep in mind that the Bank of Japan is light years away from raising interest rates. On the contrary, they are likely to do more quantitative easing rather than anything else. The market has a massive cluster of support below the 115 handle as well, and I believe it extends all the way down to at least the 111.50 level. In other words, even if we were to break down below the 115 level, I feel that it is only a matter of time before people would see it as a major value play and start buying.
If we did break above the top of the shooting star from the Tuesday session, that would also have me buying this pair but I also recognize that we are a bit overextended in general. I’d much rather buy pullbacks at this point, because we have seen such a massive explosion to the upside. Selling is an even a thought at this point, at least not until we breakdown below the 115.50 level, and even then, I would probably wait for more value. The US dollar is the favored currency by most traders around the world, so it makes sense that we continue to go much higher.