The USD/JPY pair had a very quiet session on Monday, in order to form a very neutral candle. We are sitting on top of support though, and as such it looks like a break to the upside would be an excellent opportunity to buy this pair that looks so consolidative. With this being said, we think that the 78 handle will continue to be protected by the Bank of Japan, and as a result will buying this pair as opposed to sell it.
We do see the 80 handle as massive resistance though, and as such are looking this only as a range trade. We don’t think this pair breaks out anytime soon, but if he gets above the 80.60 level, we see a move to 84 happening. If for some reason the market breaks down below the 78 handle, we think that the first signs of support should be bought as the Bank of Japan will certainly intervened sooner or later.