USD/JPY Weekly Price Forecast – US Dollar Explodes Higher Against Yen

The US dollar initially gapped lower against the Japanese yen as we had been far too overextended. Having said that, the market turned around to show signs of strength again, breaking above the ¥109 level, and even stretching towards ¥110 level given enough time. The ¥110 level will of course attract a certain amount of attention from a headline aspect, so if we were to break above there then I think it will have more people piling in. That being said though, the market has been parabolic and to simply only have one candlestick showing signs of hesitation is a bit much.

I would like to see some type of pullback in order to get long again, but we may or may not get that. I look at pullbacks as buying opportunities, as we have changed the overall trend. The size of the candlestick certainly suggests that we have further to go, but that does not necessarily mean that you jump in and start buying at these high levels. You have to be cautious about chasing the trade, which is a great way to start losing money.

I would love to see a pullback towards the ¥107 level, but I think that is not going to happen anytime soon, and therefore it is possible that we simply have to look towards shorter-term charts in order to get a possible trade going. You cannot be a seller, because quite frankly this is a market that has been overdone, so you have to be very cautious about simply jumping into the marketplace and “chasing the trade”, which is something that you should never do.