EUR/JPY Into the Gauntlet- Chasm of Support Awaits
- EUR/JPY breakdown coming into initial support targets post-BoJ
- Updated targets & invalidation levels
Broader Technical Outlook: EURJPY broke key support & bullish invalidation noted last week at 114.57/64 where the 50% retracement of the monthly range converged on the July open. The region has continued to serve as resistance with the decline now approaching near-term support structural support.
Note that daily momentum is sitting at 40 & the immediate short-bias is at risk near-term while above this trendline. A breach above basic trendline resistance off the July high is needed to shift the broader focus back to the long-side.
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Notes: The pair has continued to trade within the confines of a well-defined descending channel formation extending off the July highs with the immediate short-bias at risk while above 113.13. Interim resistance now stands at 113.82 backed by the weekly / monthly open at 114.29. A breach above the weekly opening range high is needed to validate a more significant reversal in the pair.
A break below this level targets the 61.8% retracement at 112.73 backed by a critical median-line confluence at ~112 – Both areas of interest for possible exhaustion / long-entries. A quarter of the daily average true range (ATR) yields profit targets of 44-48 pips per scalp. Caution is warranted heading into Eurozone retail sales tomorrow with the release likely to fuel added volatility in EUR crosses.
Relevant Data Releases