The EUR/JPY pair initially fell during the course of the week, but as you can see we bounced significantly in order to form a hammer. The hammer is just underneath the 130 handle, which if we can break above that, we think that this is a nice buy signal. There is a bit of resistance above, but we think eventually will be taken out, and as a result we think the longer-term trade is deftly to the upside in this market. Obviously with the Bank of Japan working against the value the Yen, we have no interest in selling this market.

The EUR/JPY pair rallied during the session on Friday, but found the 130 level still being far too resistant. If we can get above that level, this market really should continue much higher. However, it appears that the market is not quite ready to do so, as we may have a little bit of grinding to do from here.

However, on the longer-term charts it must be noted that the weekly candle is a hammer, even though it is sitting just below the 130 resistance level. This signifies to us that this market may continue to go higher fairly soon, but it may be more of a grind it vanished straight shot higher. If we can get above the 130 handle, we think that this market is a screaming buy, even though it will take a bit of persistence and fortitude in order to hang onto the trade in order to make it profitable.

As far as selling is concerned, we really aren’t that interested even though it appears that we could pull back slightly from here. It’s just far too risky of a move, as it is much easier to simply follow the larger time frames and notice that there are larger forces pushing the market around. Those forces should not be fought against, and as a result we think that this market is essentially a “one-way” trade.

We do see a lot of noise between 130 and 132, so of course if you do find yourself in a position where you are long of this market above that level, you have to understand that the move will take quite a bit of momentum to continue higher, and therefore it could be a rough ride. Alternately though, it seems like this market is destined to go much higher, especially look at the value of the Yen against the Dollar, and the fact of that market looks like it’s ready to continue higher as well. After all, these two markets do follow each other over the longer term as typically is all about the Yen, and not so much about the Dollar or the Euro.