EUR/JPY Technical Analysis: Upswing to Yield Short Entry

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Talking Points:

• EUR/JPY Technical Strategy: Flat
• Support: 134.77, 133.00, 130.13
• Resistance:137.64, 139.95, 142.27

The Euro paused to consolidate having rallied against the Japanese Yen as expected having produced a bullish Morning Star candlestick pattern. Near-term resistance is at 137.64, the 38.2% Fib Fibonacci retracement, with a break above that on a daily closing basis exposing the 50% level at 139.95. Alternatively, a turn below the 134.77-135.02 area marked by the October 14 low and the 23.6% Fib clears the way for a challenge of the 14.6% threshold at 133.00.

Our long-term fundamental outlook calls for broad-based Euro weakness as the ECB expands stimulus. With that in mind, we will treat on-coming gains as an opportunity to establish short following the upswing rather than a long trade setup. In the meantime, we will remain flat.

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Daily Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com