Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
EUR/JPY Technical Analysis: Down Trend May Be Resuming

EUR/JPY Technical Analysis: Down Trend May Be Resuming

Ilya Spivak, Head Strategist, APAC

To receive Ilya's analysis directly via email, please SIGN UP HERE

Talking Points:

  • EUR/JPY Technical Strategy: Flat
  • Euro Breaks 2-Month Support, Hints at Down Trend Resumption
  • Risk/Reward Considerations Argue Against Taking Short Trade

The Euro looks poised to renew its down trend against the Japanese Yen after prices broke through support guiding the correction higher from early-July lows. The cross has lagged selling in other Yen pairs as both currencies benefitted from spreading risk aversion but a degree of catch-up weakness may now materialize.

Sellers are aiming at support in the 134.98-135.11 area, marked by the August 5 low and the 50% Fibonacci expansion. A break below this barrier on a daily closing basis exposes the next downside threshold at 134.20, the 61.8% level. Alternatively, a push above the 136.03-11 zone – the intersection of trend line support-turned-resistance and the 38.2% Fib – opens the door for a challenge of the 136.96-137.16 region (July 10 close, 23.6% expansion).

While entering short is a thematically tempting proposition, risk/reward considerations argue against taking the trade. The available trading range is smaller than daily ATR, meaning even a short directly at near-term resistance would imply exposure to greater risk than the implied potential reward (assuming a stop-loss triggered on a daily closing basis as our strategy envisions). With that in mind, we will remain flat for now and wait for a more compelling opportunity to present itself.

Add these technical levels directly to your charts with our Support/Resistance Wizard app!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES