The USDJPY pair broke out to the upside during the session on Monday, essentially cracking the top of a couple of hammers from last week. We are testing the 102.50 level at the moment, and thereby we think we are getting ready to head to the 103 handle. Above there, things get interesting as we should really start to pick up momentum to the upside. In the meantime, we feel that pullbacks should be buying opportunities as they come, probably off of the short-term charts.

This market could very easily head to much higher levels, and that is what we anticipate given enough time. We believe that the market will be a “buy on the dips” type of market, meaning that it could be bullish for some time.

We personally believe that the market will go much higher, but it could be choppy at times considering that we are and what we believe to be a longer-term “basing pattern”, which will eventually lead to some type of carry trade like we saw in years past. Granted, we don’t have the interest rate differential quite yet, but ultimately interest rates in the United States should continue to go higher over time.

Most certainly, the Bank of Japan will continue to work against the value of the Japanese yen overall, with what is going to be massive monetary policy coming soon. This is mainly because their efforts have failed so far to keep the value of the Yen down overall.

Going forward, the 103 level will be resistive, just as the 104 and 105 level. Regardless though, we believe that ultimately we will break through all of them. Because of this, our strategy has been to buy a small amounts going forward, gradually building on our position and hopefully been able to hang onto it for some time.

This could end up being a massive position given enough time, and hopefully could be a position that makes us quite a bit of money over the next several years as the trend it appears to potentially be going to the upside given enough time.

Editor’s Note: Equity investors/traders can use the Currency Shares Japanese Yen Trust (FXY, quote) ETF to take positions in the yen without a FOREX account.  The ETF looks to track the price of the Japanese Yen (USDJPY), minus ETF fee. The fund seeks to reflect the price of the Japanese yen (USDJPY) with the shares representing a cost-effective investment relative to investing in the FOREX market.

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