Forex: EUR/JPY Technical Analysis – Six-Week Trend Line Tested
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- EUR/JPY Technical Strategy: Flat
- Support: 138.45 (23.6% Fib ret.), 136.22 (Feb 4 low)
- Resistance: 139.28-83 (trend line, 38.2% Fib ret.), 140.95 (50% Fib ret.)
The Euro began to rebound expected against the Yen after prices produced a bullish Piercing Line candlestick pattern. The pair is now testing resistance in the 139.28-83 area, marked by a falling trend line set from late December and the 38.2% Fibonacci retracement. A break above this barrier initially exposes the 50% level at 140.95. Alternatively, a reversal below the 23.6% Fib at 138.245 targets the February 4 low at 136.22.
Risk/reward considerations argue against entering long with prices squarely at near-term resistance. On the other hand, the absence of a clearly defined reversal signal suggests entering short is premature. Furthermore, the Yen’s sensitivity clouded risk appetite trends warn against taking directional bets on fundamental grounds. As such, we will continue to stand aside for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.