EUR/JPY Technical Analysis: Old Trend-line Resistance, New Support
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- EUR/JPY Technical Strategy: Long-term down-trend in question with recent trend-line break.
- EUR/JPY saw numerous iterations of support at the 112-zone; and now appears to be digging in ‘higher-low’ support around the 114.-level.
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In our last article, we looked at a top-side break of a bearish trend-line that had been active as resistance in EUR/JPY for the past six months. As we warned, an additional zone of resistance sitting above the 115.37 Fibonacci level, combined with a batch of prior price action swings, could potentially thwart the upward advance. But given that we did see the 115.37 level taken out, combined with a recent influx of support; and the prospect of top-side continuation of the move exists.
Of specific importance for that theme is the support zone just below current price action. The Fibonacci retracement of the ‘Brexit move’ in EUR/JPY has continued to provide usable levels to traders; with the 23.6% retracement helping to set prior support at 112.25, and the 38.2% retracement of the same move showing both prior support and resistance around 114.11. With the most recent pullback finding another iteration of support off of this level, traders can use this zone to stage top-side plays in the pair. Also of key interest for this support is the trend-line that we discussed in our last article. That prior down-ward sloping trend-line of resistance is showing up as near-term support (shown below in red). This can further help traders demarcate risk levels for top-side plays.
For targets on top-side plays, traders would likely want to note the level of 116.00, as the most recent swing-high reversed just above this level. After that, the price of 117.12 becomes interesting as this was the 61.8% retracement of that same Fibonacci move mentioned earlier; and after that we have the July swing-high around the 118-handle. And if that’s able to be met in short order, another ‘big’ level of interest sits at 119.90, as this is just 10 pips shy of the next ‘big’ psychological level, as well being the 61.8% retracement of the run in EUR/JPY from the year 2000 to 2008.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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