Forex: EUR/JPY Technical Analysis – Bounce Hinted Pre-ECB Meeting
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- EUR/JPY Technical Strategy: Flat
- Support: 136.22 (Feb 4 low)
- Resistance: 137.88-138.45 (channel bottom, 23.6% Fib ret.), 139.83 (38.2% Fib ret.)
The Euro may be setting up for a rebound against the Japanese Yen after prices produced a bullish Piercing Line candlestick pattern. A daily close above resistance in the 137.88-138.45 area, marked by the underside of a broken falling channel and the 23.6% Fibonacci retracement, exposes the 38.2% level at 139.83. Near-term support remains at 136.22, the February 4 low.
Risk/reward considerations argue against entering long at current levels as prices hover just below resistance. Furthermore, fundamental event risk heats up in the hours ahead with the ECB policy announcement, with the outcome threatening to substantially disrupt positioning. Indeed, the case for a dovish outcome appears compelling. On balance, we will stand aside for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com