EUR/JPY Primed for BoJ - Levels to Know
- EUR/JPY responds to support head of BoJ- Constructive above 114.65
- Updated targets & invalidation levels
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Broader Technical Outlook: We’ve been tracking this EURJPY setup over the last few weeks on SB Trade Desk with the breach abovethe July opening range high on building divergence shifting the focus higher in the pair. Note that this rally takes the pair back above former median-line support of a formation dating back to the 2013 high.
The pair made a successful defense of key support this week at the confluence of the lower parallel, the 50% retracement of the monthly range & the July open at 114.57/64. For now, I’m working under the assumption that EURJPY may have put in a significant low this month and we’ll continue to reserve this region as our near-term bullish invalidation level. Interim resistance stands at the monthly high-day close at 116.66 with key near-term resistance eyed at 118.55 with a breach there targeting subsequent topside objectives at 119.86, the 100DMA at 121.24 & the median-line (~122.60).
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Notes: The pair has continued to trade within the confines of a well-defined descending channel formation extending off the monthly highs with the immediate long-bias at risk near-term sub-116.41. From a trading standpoint, I would be looking for a move lower to offer more favorable long-entries with initial support seen at 115.80 backed by 115.48- a level of interest for possible exhaustion / long entries.
A breach above near-term confluence resistance targets subsequent topside objectives at 116.66, 117.12 & 117.52. More significant resistance is seen into the monthly high at 118.40. A quarter of the daily average true range (ATR) yields profit targets of 46-49 pips per scalp. Added caution is warranted heading into the Bank of Japan (BoJ) interest rate decision tonight with the release likely to fuel added volatility in JPY crosses heading into the close of the week / month. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Desk and take advantage of the DailyFX New Subscriber Discount.
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---Written by Michael Boutros, Currency Strategist with DailyFX
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