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EUR/JPY Technical Analysis: Long-Term Support, Short-Term Resistance

EUR/JPY Technical Analysis: Long-Term Support, Short-Term Resistance

James Stanley, Senior Strategist

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Talking Points:

  • EUR/JPY Technical Strategy: Long-term bullish, intermediate-term: mixed, short-term: range-bound.
  • EUR/JPY dropped yesterday after a dovish ECB outlay; but has since found support around a longer-term level, and is currently testing short-term resistance.
  • If you’re looking for trading ideas, check out our Trading Guides. If you’re looking for shorter-term ideas, check out our IG Client Sentiment.

In our last article, we looked at the bearish swing in EUR/JPY after price action put in a ‘failure high’ in the week prior. But given the fact that buyers had continued to show-up around a longer-term support zone that carries a rather bullish connotation around 123.22, the long-term trend continued to offer bullish perspective as buyers retained support at the 23.6% retracement of the ‘bigger picture’ bullish move.

Since then, we’ve had a number of negative factors for EUR/JPY show up, including a very dovish European Central Bank meeting yesterday. Price action tested prior lows around 122.50 but, again, bulls remained rather vigilant as that dip was bought and price action perched back-above support at 123.22.

EUR/JPY Technical Analysis: Long-Term Support, Short-Term Resistance

Chart prepared by James Stanley

On shorter-term charts, we can see where price action in EUR/JPY is testing near-term resistance around 123.75.

EUR/JPY Technical Analysis: Long-Term Support, Short-Term Resistance

Chart prepared by James Stanley

Given that we may potentially be at a turning point for a return of bullish price action, the door can be opened for topside continuation strategies. Traders looking to exude a bit more caution can wait for near-term resistance around 124.07 (the ECB swing-high) to give way as a bit of additional confirmation that this short-term strength might continue in the direction of the longer-term trend.

Stops for bullish strategies can be investigated below this recent ‘higher-low’ in the 122.75 area; but for those that want to maximize distance on the entry, stops can be investigated below the ‘bigger picture’ swing-low of 122.50.

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

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

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