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EUR/JPY Technical Analysis: Long Setup Available Off of Support

EUR/JPY Technical Analysis: Long Setup Available Off of Support

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Talking Points:

  • EUR/JPY Technical Strategy: Flat, long setup identified
  • EUR/JPY has built-in three consecutive days of support at a confluent zone.
  • The longer-running symmetrical wedge still highlights congestion, but a short-term mean-reversion setup may be available.

In our previous piece, we looked at the move lower in EUR/JPY after two targets were met on a previous short-position. And since that writing, EUR/JPY has continued to trade around the support level that had furnished those targets, and this continued support could open the door for long positions.

The support level in question is at the 135-zone on EUR/JPY. This area offers confluent Fibonacci support, with 135.13 being the 61.8% retracement of the tertiary move (taking the 2014 high to the 2015 low), 135.32 being the 38.2% Fibonacci retracement of the most recent major move (taking the April low to the June high), and 135 being a ‘major psychological level.’ Traders can look to lodge stops below the low from last week at 134.78, with targets cast towards 136 (prior price action swing-high), 136.63 (23.6% Fib retracement of the ‘secondary move’ in the pair, taking the 2012 low to the 2014 high), and 137.50 (major psychological level).

On the short-side of the market, near-term support could prove daunting for range/trend strategies. Traders can take a conditional approach for potential short positions to wait for either a) a revisit of resistance or b) a break of support to prove the legitimacy of a short stance. Should the current zone of support at 135 give way, traders can look for targets at 134 (prior price action swing low + the 3rd target from our previous article), 133.50 (50% Fib retracement of the most recent major move), 133 (previous price action swing-low and a minor psychological level), and 132.50 (major psychological level).

(click below for larger image)

Created with Marketscope/Trading Station II; prepared by James Stanley

--- Written by James Stanley, Analyst for DailyFX.com

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Contact and follow James on Twitter: @JStanleyFX

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

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