Forex: EUR/JPY Technical Analysis – Rejected at Key Trend Line
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- EUR/JPY Technical Strategy: Flat
- Support: 142.00 (23.6% Fib ret.), 140.89 (38.2% Fib ret.)
- Resistance: 143.03 (trend line), 143.46 (Apr 2 high)
The Euro turned lower against the Japanese Yen as expected after prices put in a Shooting Star candlestick pattern below resistance at a falling trend line set from late December. Near-term support is at 142.00, the 23.6% Fibonacci retracement, with a break below that targeting the 38.2% level at 140.89. Trend line resistance is now at 143.03, followed by the April 2 high at 143.46.
A 20-day ATR reading of 107 pips implies a short position targeting 142.00 requires an entry price no lower than 143.08 to satisfy a 1:1 risk/reward ratio and a stop-loss activated on a daily closing basis (as is the case with our strategy). That sits above trend line resistance, skewing positioning against taking a position. As such, we will remain on the sidelines for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com