USD/JPY Daily Outlook- July 21, 2014

The USD/JPY pair rose during the course of the day on Friday, but didn’t exactly form an impressive candle. The one thing that we did learn during this session was that the 101 level still continues to be supportive and the bottom of the larger consolidation area that we have been in for quite some time. With that being said, I have no interest in selling this market at the moment, as not only do I see the 101 level as supportive, but I think it goes all the way down to the 100 level, more of a second zone than a level.

There isn’t necessarily the right supportive candle at the moment in this market to start buying based on that alone, but I do like to support a very and I believe that it’s worth taking the risk as the rest the reward ratio is so tempting. I think that the market could very easily bounce to the 102 level, or possibly the 103 level given enough time.

Consolidation continues, so the question then becomes which consolidation area?

The consolidation overall in this market continues, but now we have to think about which consolidation area will ultimately be the one that the market follows. After all, there is consolidation between 101 and 101.80, 101 and 102.50, and 101 and 103. With that, the market has plenty of reasons to bounce around, and I believe that this will be nice for short-term traders during the course of summer.

The various levels of support and resistance within the larger consolidation area should continue to make this a very volatile market, so you will have to be aware of the fact that the volatility could continue to be rather drastic. As far as I’m concerned, I feel that the 101 level is probably the most reliable level though, especially considering that I see it as a zone, not just a simple support line. Because of this, I feel more confident about buying here than messing with the markets above, although I certainly can see the various levels available.

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Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.