EUR/JPY Technical Analysis: Resisting at Old Support
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- EUR/JPY Technical Strategy: Longer-term range still applicable, near-term indications of bearish price action.
- EUR/JPY posed a quick break below ¥120.00, then catching a ‘higher-low’ at 120.14. .
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In our last article, we looked at the continued range-bound price action in EUR/JPY with eyes on the vaulted psychological level at ¥120.00. But as we had written, until the longer-term zone of support between 118.50-119.00 was traded through, traders would likely want to avoid getting too bearish on the pair, with the potential for top-side range entries using that 120-level zone as support.
And after a quick breach of ¥120.00 last week, with one daily close below this zone, price action has run-higher, giving the appearance that the bullish side of the range may be trying to come back into the market.
But more recently, we’ve seen sellers showing quite a bit of response at the 121-handle; which was a prior support level. And this, coupled with the fact that we’ve had a recent lower-low, gives the appearance that this range may be nearing a down-side break. This should give pause to bullish approaches until more confirmation is had, perhaps using the confluent zone of potential resistance around 121.65 as an initiator for bullish-continuation.
On the bearish side of the pair, there could be an aggressive short-term setup to be worked with utilizing that zone of potential resistance. Stops above this level could account for ~70 pips of risk, and an initial target cast towards that zone of support around 120.20 could allow for ~80 pips of potential upside to the initial target.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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