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EUR/JPY Becomes Scalping Target with Technical Convergence

EUR/JPY Becomes Scalping Target with Technical Convergence

2010-03-17 14:54:00
John Rivera, Currency Analyst
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Key Technical Levels

0317scalp1

The 50-Day SMA at 125.34 is a significant barrier for the EUR/JPY and considering that price action has held below the technical level since January 5th, a major catalyst may be needed to see the level broken. The current rising channel is an indication that there is a solid level of support which is limiting downside risks at the moment. We see that over the past 24 hours a rising trend line has provided a solid target level for short-term traders, which should be monitored as a break below could signal a shift in sentiment.

0317scalp2

Quantitative Metrics

The lingering credit issues for European nations have kept traders cautious which has reduced the potential for a bullish breakout. Therefore, we have seen the pair’s ATR begin to decrease during the current bullish rally as it has been constructed in small increments. A Bollinger band width of 579 pips speaks to the trending nature of the pair and increases the risks for scalpers. Additionally, a one week implied volatility reading of 11.25 is the second highest of the most traded pairs and a red flag for high frequency traders.

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