The EUR/JPY pair fell hard after initially trying to rally during the week, in order to slam into the 125 handle. The 125 handle of course is very important, as it was significant resistance back in February and March, and now has been retested several times. All of the yen related pairs have been absolutely erratic, and quite frankly dangerous lately. This of course includes this pair, and as a result a lot of accounts probably got smoked this past week.
However, if there was ever an obvious place for support, the one 25 handle in this market is definitely it. The closing of the week towards the low of the range of course is a bit disconcerting, but quite frankly if we can get some type of supportive candle right around the 125 handle, we wouldn’t hesitate to start buying. It’s difficult to imagine that it will be based off of the weekly chart, so you may have to look towards the shorter-term charts such as the daily, or possibly even the four-hour chart in order to find that signal. Nonetheless, you can still use those shorter timeframe charts in order to find entry points on the longer-term trend.
If we managed to break down below the 125 handle, I would anticipate that the 120 handle would be almost impossible to overcome by the sellers. That is because there is so much noise between 125 and 120, they would take something extraordinarily bearish to happen in order for that was to occur. In fact, under the 120 handle the Bank of Japan would more than likely make its intentions known again by intervening.
Going forward, we fully expect to see this pair return to its bullish ways, but we have definitely stirred up a storm of volatility lately. For those that are patient enough to wait for the right signal, we believe that this market will continue higher, and that 135 handle will be targeted. As far as selling is concerned, we just cannot do it with the Bank of Japan out there waiting to intervene in case of a real meltdown.
FURTHER DETAIL ANALYSIS INSIDE
FURTHER DETAIL ANALYSIS INSIDE
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