The EUR/JPY pair initially rallied during the week, but as you can see it fell enough to form a shooting star. However, this shooting star sits on top of the 130 handle, an area of extreme support in this market. Because of this, we don’t feel that this market is necessarily going to fall apart at this point, rather we will find a bit of a grinder going forward.
That isn’t exactly a stretch of imagination anyway, as the market has been so parabolic it really does need to rest from time to time. Looking at the longer-term charts though, we can still make a case for the 150 level based upon a bullish flag that was broken out of earlier this year, we still think that will eventually be what happens.
There will be back from time to time, and we could essentially pullback from here, but we find that there should be far too much support between here and 128 or so to let the market fall much farther than that. Also, it should be noted that the Euro picked up a little bit of strength against the US dollar during the week, and that should bode well for this pair as well.
The Bank of Japan will continue to work against the value of the Yen, and as a result this market will eventually go higher. Perhaps the pullback gives us an opportunity to buy a bit cheaper, but again as I said before, we do not expect much in the way of pullback. We may get as low as 128, but below there it’s a bit difficult to imagine at this point.
A supportive candle will be more than enough reason for us to start buying, and we would use either the daily or weekly charts to enter the market. A break of the high from the previous week is obviously a bullish sign, but quite frankly we are willing to buy any signs of support at all in this market as it has been so bullish for so long.
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