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We’ve been following this pair over the past month as the prior bullish up-trend has broken down. Signs of turbulence began to show in early-February, just after the pair had perched up to a fresh two-year high of 137.50. This led to a quick move down to a key zone of prior support, with the price of 132.05 helping to elicit buyers. Through February, each drive into support penetrated a bit deeper until, eventually, prices slipped down to fresh five-month lows. In March, we saw a bit of support develop around the 130.00 psychological level, and price action has since bounced back to find resistance in that prior zone of support.
Short-side setups can investigate stops above the February 27th swing-high of 131.20, allowing for a stop of less than 90 pips with an initial target of ~130 pips; making for a better than one-to-1.44 risk reward ratio down to the initial target. Stops can be adjusted down to break-even at that first target, with a secondary target cast towards 128.50.
EUR/JPY Price Chart: Daily Time-Frame, Resistance at Prior Support
Chart prepared by James Stanley
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--- Written by James Stanley, Strategist for DailyFX.com
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