Bullish EUR/USD at Support, Bearish EUR/JPY at Resistance
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The net effective exposure of the below two setups is short USD/JPY, which is a setup that I’m tracking but not yet ready to act on. EUR/USD and EUR/JPY, on the other hand, each have attractive setups at the moment that open up the possibility of a hedged stance around the single currency, looking for prevailing forces in USD/JPY to continue pushing.
Bullish EUR/USD Off of Support
Prices are finding support at a rather familiar zone of 1.2335-1.2350. This area started to come into play in January and, since then, has helped to show multiple support and resistance hits in EUR/USD. This area is now also confluent, given that we have the projection of the bearish trend-line as taken from the February/March highs. That trend-line was broken last week, and prices moved up to find resistance just shy of 1.2500. Now, we have that prior trend-line of resistance showing as fresh support, and this opens the door for topside setups. Stops can be set just below the March low of 1.2237 to take on ~110 pips of risk, with an initial target at 1.2460.
EUR/USD Four-Hour Chart: Support at Prior Resistance
Chart prepared by James Stanley
Bearish EUR/JPY Off of Resistance
EUR/JPY moved down to a fresh seven-month low last week, but bears were unable to make much more ground as prices quickly snapped back above the 130.00 psychological level. Prices rallied all the way into the zone of prior support that had helped to hold the lows in Q4 of last year into January of 2018; and over the past few days we’ve seen a continuation of resistance here, opening the door for short-side setups targeting a re-test of 130.00.
Stops on the position can be set above the March high of 132.43, and preferably above the swing high just a few pips away at 132.50. This would allow for initial targets just inside of the psychological level at 130.20.
EUR/JPY Daily Chart: 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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