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EURJPY Rally at Risk Sub 141- Weekly Opening Range in Focus

By , Currency Strategist
24 February 2014 21:58 GMT

Talking Points

  • EURJPY struggles below key technical resistance around 141
  • Broader outlook constructive above 138.74- bullish invalidation
  • Event risk on tap from Japan & Eurozone

EURJPY Daily Chart

Forex_EURJPY_Rally_at_Risk_Sub_141-_Weekly_Opening_Range_in_Focus_body_Picture_2.png, EURJPY Rally at Risk Sub 141- Weekly Opening Range in Focus

Chart Created Using FXCM Marketscope 2.0

Technical Outlook

  • EURJPY testing key technical resistance at 140.95 – 141.17
  • Trading within ascending channel formation off the February low
  • Weekly opening range in focus- Break to validate scalp bias
  • Topside breach targets objectives at 142.06, 142.73 & 144.49
  • Support at monthly trendline, 138.74/94 (bullish invalidation) & 138.15/24
  • Daily RSI sub-60 (topside trigger with break above 141)
  • Failure of RSI to mount 60 turns bearish with break sub-50
  • Key Events Ahead: JapanCPI (Consumer Price Index) & Industrial Production data on Thursday and EurozoneFebruary Advanced CPI on Friday

EURJPY Scalp Chart

Forex_EURJPY_Rally_at_Risk_Sub_141-_Weekly_Opening_Range_in_Focus_body_Picture_1.png, EURJPY Rally at Risk Sub 141- Weekly Opening Range in Focus

Notes: The EURJPY has been a popular pair in the DailyFX on Demand trading room and while a topside break of the monthly opening range does suggest we maintain our bias heading into the close of the month, the pair has now encountered critical resistance around the 141-handle. This region is defined by the 50% retracement of the decline off the December high, the 61.8% Fibonacci extension from the ascent off the monthly low and a longer-dated 61.8% retracement taken from the descent from the 2008 high.

Our immediate focus is on a break of the weekly opening range which is forming just below this key threshold. A topside break/close above 141.17 with RSI conviction keeps our bias weighted to the topside heading into the close of the week with such a scenario warranting long exposure into subsequent resistance targets. A move sub 140.33 puts us neutral with a break below 140.07 shifting our near-term focus to the downside.

* It’s extremely important to give added consideration regarding the timing of intra-day scalps with the opening ranges on a session & hourly basis offering further clarity on intra-day biases.

Key Threshold Grid

Entry/Exit Targets

Timeframe

Level

Significance

Bearish Invalidation

Daily / 30min

140.95– 141.17

50% & 61.8% Retrace(s) / 61.8% Ext / Weekly ORH

Break Target 1

30min

141.60

Soft Resistance / Pivot

Break Target 2

Daily / 30min

142.06

61.8% Retracement

Break Target 3

30min

142.40

Soft Resistance / Pivot / Jan 19th Weekly High

Break Target 4

Daily / 30min

142.73

100% Extension / Pivot

Break Target 5

30min

143.25

Soft Resistance / Pivot

Break Target 6

30min

143.65

78.6% Retracement

Break Target 7

Daily / 30min

144.49

December 27th close / Soft Resistance / Pivot

Support Target 1

30min

140.33

Weekly ORL / Feb 11th High

Bullish Invalidation

30min

140.07

23.6% Retracement

Break Target 1

30min

139.70

Soft Support / Pivot

Break Target 2

30min

139.33

38.2% Retracement

Break Target 3

Daily / 30min

138.74/94

Last Week’s Low / 50% Retracement

Break Target 4

Daily / 30min

138.14/25

61.8% Retracement / 100DMA

Average True Range

Daily (20)

126

Profit Targets 30-32pips

*ORH: Opening Range High

*ORL: Opening Range Low

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

For updates on this scalp and more setups follow him on Twitter @MBForex

To contact Michael email mboutros@dailyfx.com or Click Here to be added to his email distribution list

Join Michael for Live Scalping Webinars on Wednesday & Thursday morning this week on DailyFX Plus (Exclusive of Live Clients) at 1130 GMT (11:30ET)

Interested in learning about Fibonacci? Watch this Video

24 February 2014 21:58 GMT