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EUR/JPY Technical Analysis: A Thicket of Resistance Awaits

EUR/JPY Technical Analysis: A Thicket of Resistance Awaits

2016-11-09 20:03:00
James Stanley, Currency Strategist
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Talking Points:

  • EUR/JPY Technical Strategy: Range-bound past three months, price action nearing resistance of range.
  • EUR/JPY put in a volatile day of price action, having pierced through near-term support to bounce higher into resistance.
  • If you’re looking for trading ideas, check out our Trading Guides.

In our last article, we looked at EUR/JPY after the pair began to show bullish characteristics while still entangled in the longer-term range. We had emphasized the level at 114.11, as this was the 38.2% Fibonacci retracement of the ‘Brexit move’ in the pair while also having shown as prior resistance. As of our last article, this level had begun to show as fresh support, and this led-in to another move-higher to, again, test resistance at the 50% retracement of that same Fibonacci setup at 115.62.

Last night’s tumult around the U.S. Presidential Election brought another test of support at the 114.11 level, followed by another move-higher to resistance at 115.62; thereby further confirming this Fibonacci retracement as a mechanism that can provide usable information to traders.

With price action now sitting near resistance, traders can move forward accordingly by either a) looking to get short in the effort of trading the next side in the range or b) waiting for prices to break above resistance before assigning a bullish bias to the pair. Given the pandemonium that’s been seen across global markets around the U.S. Presidential Election, the latter of those options would likely be the most attractive as it comes with the lowest risk outlay (no exposure taken-on by waiting for confirmation).

At this zone of resistance are multiple price action swings from the past three months with numerous failed tests of resistance. The Apex of these swings shows at approximately 116.64; just a little more than 100 pips away from current prices. Should price action continue to be bid higher, breaking resistance, traders can then look to get long on a ‘higher low.’ The 61.8% retracement of that same Fibonacci setup is at 117.13, and this can be an opportune area to look for that ‘higher high’ to come-in before looking to buy a ‘higher-low’ in the pair.

EUR/JPY Technical Analysis: A Thicket of Resistance Awaits

Chart prepared by James Stanley

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

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