EUR/JPY Technical Analysis: Euro Strength, Yen Weakness Continues
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- EUR/JPY Technical Strategy: Flat, Pending Short Setup Canceled
- EUR/JPY surges above resistance as risk aversion yields
- Five consecutive daily gains behoove patience for the short setup until more clear resistance comes in.
In yesterday’s piece, we identified a potential short setup in EUR/JPY, citing potential resistance at the 136.40 area, which is the 61.8% Fibonacci retracement of the most recent major move (August high to the September low). Price action on Friday continued to trade higher in EUR/JPY, offering intra-day resistance at this key level, only to break later in the session. At this point, that potential level of resistance appears as though it may become new intra-day support, thereby invalidating yesterday’s pending short setup.
However, prospects for a short position in the pair are not completely foregone, as resistance on a projected trend-line that had previously offered support (outlined in blue on the chart) could prove an attractive entry prospect should this EUR/JPY strength continue. Other potential levels of resistance are 137.39 (76.4% of the most recent major move), and 137.93 (the 50% Fib retracement of the ‘intermediate term’ move).
On the other hand, breaks above 139 could prove attractive on the long side, and this could invalidate the short stance altogether and cast eyes towards a future long position.
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