EUR/JPY Technical Analysis: ¥120.00 as the Focal Point
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- EUR/JPY Technical Strategy: Longer-term bullishness intact, intermediate-term range-bound.
- EUR/JPY has continued to find support around the 121-handle, respecting the long-term zone of support underneath current price action around the 120-level.
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In our last article, we looked at the near-term range that’s developed in EUR/JPY with an eye on a longer-term support zone around the 120-handle on the pair. And given recent price action, we weren’t the only ones watching that zone as buyers have continually come-in to seize on moves-lower, yet continuing to show support above this long-term zone, extending range-bound price action in the pair that’s been present since mid-December.
Also in that previous article we looked at what’s been a rather consistent element of resistance at 123.09 on the pair, which helped to produce another iteration of resistance last week. This is the 38.2% Fibonacci retracement of the major move in EUR/JPY spanning from the 2008 high to the 2012 low; and over the past six weeks this has become a type of ‘danger zone’ for bulls as strength has continually waned as price action tests deeper into resistance. This has brought on a series of ‘lower-highs’ over the past six weeks that could further temper bullish optimism.
But given the fact that the post-Election trend remains active with price action remaining well-supported above the 38.2% retracement of the move, traders can continue to grade near-term price action as range-bound while longer-term price action continues to hold bullish-trend potential.
For bullish strategies, that same zone of potential support around the 120-handle could be attractive for top-side entries. Given the fact that we’ve previously seen a quick break of support, combined with the lower-highs that have begun printing; we can deduce that bulls are growing weary with a lack of top-side drivers over the past six weeks; and this isn’t necessarily ‘bearish’ as much as it’s simply ‘not currently bullish;. This could lead to a quick break of near-term support, at which point gauging buyer demand around that long-term zone around 120 could denote continuation potential of the ‘bigger picture’ bullish up-trend. And for such approaches, the zone of price action between ¥118.50-¥119.00 could be attractive for stop placement and risk management.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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