Skip to Content
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
More View More
EUR/JPY Technical Analysis: ECB-Weakness a Mere Blip in the Trend

EUR/JPY Technical Analysis: ECB-Weakness a Mere Blip in the Trend

James Stanley, Senior Strategist

To receive James Stanley’s Analysis directly via email, please sign up here.

Talking Points:

  • EUR/JPY Technical Strategy: Intermediate-term bullish; near-term price action facing rigid resistance.
  • The price action zone from 123.09-124.09 has continually-thwarted price action’s top-side advance for the past two weeks.
  • The ECB extension of QE two weeks ago is now showing as a mere blip in recent price action, setting a higher-low and a week later another higher-high. With this trend remaining bullish, even after the ECB drove bearishness into the Euro, traders would likely want to take note that ‘something bigger’ is driving near-term price action (Yen weakness).
  • If you’re looking for trading ideas, check out our Trading Guides.

In our last article, we looked at the potential for a new higher-low in EUR/JPY after the European Central Bank extended QE. After this announcement, the Euro was offered-hard across-the-board, but as we noted, the ‘bigger picture’ trend in EUR/JPY has been quite bullish, and traders would likely want to use that short-term weakness to position-in to longer-term bullish strategies.

The level that we pointed out around 120.85 had helped to set support after that ECB-inspired move-lower; after which EUR/JPY ran-up to set a new short-term swing-high at 124.09.

So – to put this in scope – after the European Central Bank extended their QE program, creating weakness in the Euro against most currencies, EUR/JPY merely set a higher-low which then led-in to another higher-high just a week later. This is indicative of a market being driven by a ‘bigger theme,’ and that’s the prospect of continued Yen-weakness as we move into 2017. This is also something that can make top-side continuation, particularly on a longer-term basis, quite attractive.

Current price action is attempting to dig-in support off of a short-term trend-line that can be found by connecting the election-night lows to the low on December 4th. Monday’s price action put in multiple tests of this trend-line and we saw the same this morning; each producing some element of bounce. But this may not be the ‘longer-term’ higher-low that bulls are likely looking for.

Instead, there are two potential levels that could serve such a function: The same price action swing that had shown-up around 120.85 that we looked at in our last article, and a bit deeper around the ‘major’ psychological level at around 120.00. Each of these could be interesting support inflections for longer-term bullish strategies.

Chart prepared by James Stanley

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

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

Contact and follow James on Twitter: @JStanleyFX

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

DISCLOSURES