The USD/JPY pair initially fell during the session on Tuesday, but as you can see the 99.50 level offered enough support in order to bounce the market higher, and form a hammer. The market closing above the 100 handle is significant as well, at least from a psychological perspective. After all, stock markets are going fairly well, and as a result this market typically will do better as it is a “risk on/risk off” type of pair. On July, the shape of this candle does suggest that there was a significant push higher later in the day, which of course is always a good sign as the markets corrected themselves later in the session.
Going forward, we believe that a break of the top of the hammer from the Tuesday session is enough of a reason to believe that the markets are going to the 100.50 level and higher. After all the 100.50 level is the area that we believe is the last vestige of resistance in the near-term. If we can get above that, that of course is very bullish for us and we believe that the market will head to the 105 level.
As for selling is concerned, we have absolutely no reason to, and we believe that any pullback at this point time will be a nice buying opportunity. After all, the 99 handle has a nice cluster that could offer support, as well as new buyers stepping into the market, trying to take advantage of what is obviously a breakout at this point.
Below there, we see quite a bit of support at 98 as well, and then at 97. In other words, there are plenty of reasons to think that this market will get lifted if it falls, and because of that we are very comfortable going long only at this point. Selling will be an option, and we believe that pullbacks going forward will also offer chances to add to the position as we gain from current levels. Ultimately, we believe that this market is going to offer long-term trading opportunities to the upside.
Written by FX Empire