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EUR/JPY Technical Analysis: Support Meets Prior Resistance

EUR/JPY Technical Analysis: Support Meets Prior Resistance

James Stanley, Senior Strategist

Talking Points:

- EUR/JPY Technical Strategy: Retracement in bullish trend finding support at prior resistance.

- The pair pulled back after running into a key Fibonacci level; but after finding support around an interesting zone yesterday, bulls have started to show-up again.

- Want to see how Euro and Yen have held up to our DailyFX Forecasts? Click here for full access.

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In our last article, we looked at a megaphone setup in EUR/JPY as the pair’s range expanded near yearly highs. After a topside breakout, EUR/JPY traded up to another new high at 134.41. This is a key Fibonacci level, as 134.41 is the 61.8% retracement of the 2014-2016 major move in the pair, and this is helping to set near-term resistance.

EUR/JPY Daily: Near-Term Resistance at the 61.8% Retracement of the 2014-2017 Major Move

EUR/JPY Technical Analysis: Support Meets Prior Resistance

Chart prepared by James Stanley

That resistance came into play on Friday morning, and after grinding around this level for a few hours, sellers took over and drove prices lower. And that retracement continued with aggression until another support zone came into play. At 132.05 we have the 50% retracement of the 2008-2012 major move, and at 131.70 we have the prior swing-high point of resistance. Prices found support here yesterday morning, and since then we’ve seen a bullish response as prices have trickled higher.

EUR/JPY Four-Hour: Support begins to show at prior resistance, Fibonacci level

EUR/JPY Technical Analysis: Support Meets Prior Resistance

Chart prepared by James Stanley

Yesterday’s doji at support can open the door for topside plays. Traders can look to set stops below yesterday’s low, or, if looking for a more conservative stance with a wider stop and a smaller position size, stops can be cast below the previous swing-low of 130.62.

For traders that want to approach EUR/JPY in a more conservative manner, a potential morning star formation may be brewing after Monday’s big down-day is combined with yesterday’s doji. If today’s Daily Candle closes above 133.07, we’ll have a morning star formation; and this can be one of the more interesting bullish reversal formations available to traders. At that point, traders can trade the setup by setting stop below the low of the doji, and looking for that bullish theme to continue up towards prior resistance at 134.41.

EUR/JPY Daily: Doji at Support Zone, Potential Morning Star Formation

EUR/JPY Technical Analysis: Support Meets Prior Resistance

Chart prepared by James Stanley

--- 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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