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
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/vg7w10la3j https://t.co/7Yd5Tzua0d
  • Do you know the difference between investing and trading? Because while the goal might seem the same, they're very different things . Learn more here.https://t.co/fG6fNEPj9q https://t.co/A0W3CA5EWh
  • The Canadian Dollar remains supported amid elevated crude oil prices. Don’t be surprised if the Bank of Canada disappoints aggressive hawkish expectations. Earnings season is a wildcard. Get your weekly Loonie forecast from @ddubrovskyFX here: https://t.co/iyb5OmW2S4 https://t.co/Oh35VUg9Gr
  • Rather than focusing on earning a specific number of pips per day, traders need to focus on what can be controlled. In trading terms this relates to following a strategy perfectly, with no emotion or hesitation. Learn more here: https://t.co/6ZH026QLRN https://t.co/jQ9HH9KuWy
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0uF2Ct https://t.co/VXiNCuR3bF
  • The Spinning Top candlestick pattern forms part of the vast Japanese candlestick repertoire with its own distinct features. Gain a better understanding of the spinning top candlestick here: https://t.co/DWm7cBMUg9 https://t.co/9SC4I69oi7
  • The European Central Bank will consider it a job well done if there is no movement in EUR/USD or the Euro crosses before, during or after Thursday’s policy announcements by its Governing Council. Get your weekly Euro forecast from @MartinSEssex here: https://t.co/TCTonpE9Ik https://t.co/qq6TTaPtLE
  • Further your forex knowledge and gain insights from our expert analysts @ddubrovskyFX and @FxWestwater on JPY with our free Q4 market analysis guide, available for free today.https://t.co/mzeJ5x73N3 https://t.co/zll2sxL4ja
  • Becoming a forex trader means living and breathing the excitement, risk and reward of trading in the biggest and most liquid market in the world. Do you have what it takes? Read here to discover the qualities and processes it takes to build consistency: https://t.co/EfWEACQ6Cz https://t.co/Js6SNdNj9y
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/kIIBffEMi7 https://t.co/MqFQ9uS26R
EUR/JPY Technical Analysis: Trading Deeper Within the Wedge

EUR/JPY Technical Analysis: Trading Deeper Within the Wedge

James Stanley, Senior Strategist

To receive James Stanley’s analysis directly via email, please SIGN UP HERE

Talking Points:

  • EUR/JPY Technical Strategy: Flat
  • EUR/JPY surges above resistance as risk aversion continues to increase.
  • Five consecutive daily gains behoove patience for the short setup until more clear resistance comes in.

In our last piece, we looked at the support that had developed in the 133.50 zone in EUR/JPY after three days of big losses last week sent prices spiraling lower. Since then, prices have continued to resist in the 135-135.30 zone, opening the door for potential short positions while price action remains confined within the longer-term, bigger-picture symmetrical wedge in EUR/JPY.

The bigger-picture wedge consists of a resistance trend-line connecting the June 2015 high to the August 2015 high, and a support trend-line connecting the April 2015 low to the September 2015 low; and indicates congested price action after the pair put in outsized moves last year. And as both represented economies face continued deflationary pressures and as analysts begin to increase estimates for additional stimulus to offset these pressures, the EUR/JPY becomes a strong proxy for ‘risk-on’ and ‘risk-off’ as many other currency pairs.

Until this symmetrical wedge breaks, traders can integrate a range-bound logic of selling resistance and buying support; and for those looking for extended moves, this could provide the initial entry should either trend-line give way. Currently, the short side is more attractive for this theme, as we’ve seen three consecutive days of resistance in the 135-135.30 zone, and prior support at 133.50 could open up the possibility of an attractive risk-reward ratio on a short entry. For this thesis, traders can look to place stops above 135.35 (the Friday high, as well as the 61.8% Fibonacci retracement of the most recent major move, taking the April low to the June high), with targets cast towards that 133.50 support level, which is the 50% Fib retracement of that same move, as well as being a price action swing low from last week.

The long side of EUR/JPY could be more difficult to work with given the current setup and the amount of overhead resistance very near current price action. To trade the long side, traders could wait for a break of this resistance so that the pair could show the prospect of continued bullishness, looking to buy new support in the vicinity of old resistance. The resistance levels that would be most attractive to this end would be in that 135 zone, in which breaks of this zone from 135-135.30 could open the door for long positions with targets cast towards 137.50 (confluent level of 76.4% of the most recent major move and a major psychological level).

EUR/JPY Technical Analysis: Trading Deeper Within the Wedge

Written by James Stanley of DailyFX; you can join his distribution list with this link, and you can converse with him over Twitter @JStanleyFX.

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

DISCLOSURES