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EUR/JPY Remains Scalping Target As Consolidation Continues

EUR/JPY Remains Scalping Target As Consolidation Continues

2010-07-07 14:51:00
John Rivera, Currency Analyst
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EUR/JPY erased earlier losses as risk appetite has returned as current valuations have started to motivate bargain hunters. The pair has seen price action increasingly consolidate as fluctuating risk trends and waning Euro support have left it directionless. The looming results for the stress test of European banks could limit conviction in either direction for the single currency increasing the pair’s potential as a scalping target. Additionally, following the large sell off in stocks, traders are starting to reassess their positions which could lead to a decline in broader volatility. Additionally, a lull in price action typically accompanies the summer season in the U.S. decreasing risks for high frequency traders.

Key Technical Levels

SR-10-07-07-01

The 20-Day SMA at 110.78 has provided short-tern resistance for the EUR/JPY and has defined the upper bound of a tight range. Price action over the past few weeks has for the most part been confined between 109.50 and 111.00 and the levels should be targeted for entering and exiting positions.

SR-10-07-07-02

Quantitative Metrics

The EUR/JPY’s ATR has been in a steady decline as the range bound pair continues to see increasing consolidation. At 159 pips the pair’s daily volatility still remains one of the highest levels amongst the most traded pairs, as fluctuating risk trends and Euro sentiment increases its risks. A narrowing Bollinger band provides some comfort that price action will continue to remain subdued and at 550 pips, its level of variance is toward the bottom of the majors.

SR-10-07-07-03

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