EUR/JPY Technical Analysis: Digging Deeper into the Wedge
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- EUR/JPY Technical Strategy: Flat.
- EUR/JPY continues to display congested price action; further developing within a symmetrical wedge pattern.
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In our last article, we looked at the congested structure in EUR/JPY as a near-term bullish up-trend was complicated by an extremely bearish longer-term move. And while a congested trend isn’t necessarily enough to nullify a trade setup in and of itself, the fact that price action was so far away from any recent support or resistance inflections made stance moving forward rather complicated.
In the week since that last article, directional bias in EUR/JPY hasn’t become any clearer. While we did ‘technically’ see a higher-high above the 124.40 level we had pointed out last week, sellers came in near-immediately to fade the move. And then support dug-in beyond the 123.08 level that had provided so much resistance over the previous month; and this is a key level as the 38.2% Fibonacci retracement of the 2008 high to the 2012 low. So, this isn’t the bullish scenario that usually gets traders excited to load up the long-side of the move.
Moving forward, the levels at 124.40 (resistance) and 123.08 (support) remain viable for directional stance. Traders can wait for concerted breaks of either level to indicate forward-positioning. Should 124.40 finally give way, traders can look for higher low support above the 123.50 Fibonacci level before triggering top-side positions. Should price action drive below 123.08, traders can begin looking to line up the short side of the move by selling the ‘lower high’ after support gives way.
Created with Marketscope/Trading Station II; prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.