The EUR/JPY pair had a strong showing on Friday, as the Yen sold off against most other currencies. This pair has been massively bullish over the long run, and we have recently just broken out of an ascending triangle that should see this pair go much higher. Quite frankly, based upon this triangle, we should see a move to the 137 handle.
Looking at this chart, it’s hard not to mention that there is a hammer on the weekly chart as well, so move higher is indeed strong based upon short and long term charts. This of course jive well with the overall trend, and let’s not forget that the Bank of Japan is aggressively selling off the Yen in its own way by purchasing bonds from the government.
Going forward, we think that the Yen will continue to depreciate, and this will be exacerbated by the fact that the G 20 couldn’t be bothered to suggest that the Japanese were doing anything wrong. In other words, there will be other central banks fighting this move.
Going forward, we think that the Yen will continue to depreciate, and this will be exacerbated by the fact that the G 20 couldn’t be bothered to suggest that the Japanese were doing anything wrong. In other words, there will be other central banks fighting this move.
If that’s the case, this trade is still fairly young in its duration, and we do believe that it will be a long-term trade. We look at this chart and think in terms of months, if not years, and not days or hours. There are plenty of investors out there simply buying this pair and leaving it be. We believe that you could have a “core position” in this market, and add and subtract if you go along. Of course, you have to be aware of your countries FIFO laws, and whether or not this would have an effect on scaling in and out of a position dynamically.
Nonetheless, it’s abundantly clear that you cannot short this pair under any circumstances. Although there have been times when this market has pullback suddenly, but every time this is happened it’s been a buying opportunity. There is nothing on this chart that suggests that’s about to change anytime soon as the bullishness looks like it’s just starting up.
The EUR/JPY pair fell during much of the week, but as you can see gained towards the end in order to form a hammer. It now looks as if the 131 level is going offer support, and that the market can continue higher. Quite frankly, if it weren’t for the fact that the Euro had performed so weakly, this pair would’ve gone much higher. However, the Euro struggle most of the five sessions. Nonetheless, this is an anti-Yen play, not necessarily a pro-Euro one. That being said, a break above the highs from this past week leads us to the 135 handle.
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