USD/JPY Forecast May 4, 2017, Technical Analysis

The USD/JPY pair had a positive session on Wednesday, as we have found support at the 112 level. The 24, 48, and 72-hour exponential moving averages are all moving in the same direction, which of course is up. I believe that the market will continue to find buyers below on dips, as we have broken above a significant resistance barrier. In fact, I like the look for this market as the US dollar continues to strengthen against most currencies. It is not until we break down below the 111.80 level that I would consider selling. I believe that the market will continue to find buyers on dips, and not only that stock markets may give us a lift as well.
Risk on/risk off
This pair tends to be sensitive to risk appetite, especially in the stock markets. Beyond that, treasury yields tend to drive this market as well, and the differential between the US and Japanese bond markets make quite a bit of noise in this market as well. I think that we could go as high as the 115 handle which is the longer-term resistance barrier in the consolidation that we had seen previously. The move will probably be choppy but short-term traders will continue to look at dips as value in a market that has been reasonably reliable over the last 4 or 5 days. I like buying dips, and I believe that patient traders will continue to be rewarded as we grind our way to the upper reaches of the consolidation region that we have been in. If we can break above the 115 level, becomes a much more longer-term “buy-and-hold” type of situation. I don’t think that’s going to be easy, but it is certainly something to shoot for over the longer term.