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EUR/JPY Technical Analysis: The Bullish Range is at Support
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Talking Points:
EUR/JPY Technical Strategy: Bullish longer-term trend persists; near-term range-bound price action.
After setting a new high shortly after last month’s rate hike from FOMC, EUR/JPY has been unable to break-above resistance while support has remained respected, leading to range-bound price action over the past ~month.
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In our last article, we looked at the continued up-trend in EUR/JPY after another dovish move from the ECB produced a mere blip in the ‘bigger picture’ bullish trend. Deductively, this is an extremely bullish signal as even a dovish Central Bank-move was unable to turn the trend; so as the Yen has been going through its own bout of retracement after a massive bout of weakness, EUR/JPY has remained relatively well-supported. This has produced a range-bound formation near the top of the ‘bigger picture’ up-trend, and this can be constructive for traders looking to add on short-Yen exposure or looking to offset short Euro-risk from other setups.
Chart prepared by James Stanley
Given the veracity of the bullish move leading into this range, traders would likely want to proceed-forward with a trend-side bias; looking to buy around support and using resistance to scale-out of the position or manage-off bullish risk rather than looking to open fresh shorts.
Traders can look to the post-ECB swing-low in the pair at 120.87 to set risk, with potential resistance areas at 123.00 and 124.09, respectively. Given how quickly sellers have responded to resistance previously at 124.09, traders would likely want to set limits inside of this level, around 123.80-123.90 in the event that a recurrent test is unable to match that prior-high.
Chart prepared by James Stanley
--- Written by James Stanley, Analyst for DailyFX.com
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