EUR/JPY Channel Offers Potential Scalping Opportunity
The panic generated by the European debt crisis has is showing signs of slowing today which could be because we are at the end of the week. Nevertheless, it is generating the necessary price action to execute a successful scalping strategy. The EUR/JPY has been one of the most impacted pairs but we have seen it consolidate over the past few days as commodity driven pairs took the brunt of the punishment. Rumors of ECB intervention has also helped put a floor under Euro crosses as traders are proceeding with caution.
Key Technical Levels
A long-term support trend line has helped slow EUR/JPY losses and could limit further downside risks. However, given the level of uncertainty and concern over the region further bearish potential exists. We are counting on typical end of the week apathy from traders to lead to further consolidation from the pair which has started to trade within a ascending channel. The formation is providing target levels for entering and existing positions.
The EUR/JPY has seen its price action quiet over the past few days but it is coming on the heels of extreme volatility which led to its ATR soaring to 332 pips. Additionally, the extended bearish trend for the pair has pushed its Bollinger band width to a staggering 1,977 pips raising red flags for high frequency traders.
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