The EUR/JPY pair had a slightly bullish week after initially falling. This formed a hammer that sits just above the 100 level, and this does in fact look relatively positive. However, will we all know that there is an extraordinary amount of headline risks when it comes to Europe and by extension the euro. Because of this, we are very hesitant to go long unless we see a weekly close above the top of this week’s candle. This could possibly be a nice long-term trade, but in order for this to be true, we expect that we need to see something substantial out of the European meetings later this week. We would buy though, on a break of the top of the weekly candle.
The EUR/JPY pair attempted to rally during the Thursday session, but fell back down to form a shooting star. More interestingly, the candle formed is a shooting star just above the 100 level. Because of this, we think that this market will fall back down, and would sell on a break of the bottom of the session for Thursday. The market has been in a long term downtrend at this point, and a fall back to previous lows is very possible. The market is a “sell only” one at this point, and as long as the USD/JPY doesn’t sell off aggressively, this market should be left alone by the Bank of Japan and continue to fall.
The EUR/JPY pair rose during the session on Wednesday as the markets showed a significant bounce late in the US session. The EUR/JPY is notorious for following the global stock markets overall – notwithstanding the recent problems in Europe – and as a result it is a good risk pair. The breaking of the 100 level is solid now, and we suspect that the 50% Fibonacci level will now be tested at roughly the 102 handle. We are positive at the moment in this market and suspect that the trading will be choppy, but positive overall.
The EUR/JPY pair rose during the session on Tuesday as the 100 level continues to be the center of focus in this pair. The 38.2% Fibonacci level is just above, and it looks as if the area is going to be consolidative going forward, but there is a possible market mover in the form of the Federal Reserve announcement late in the US session. The Fed can ease more, and if they do – this pair should rise as the Euro will gain overall. The 99 to 101 levels are the bottom and tops of the range and a break out of the area will have us going with whatever direction gains the upper hand.
In this report, we normally would have analyzed the EUR/CHF pair, but as you know there is simply no action to be had in that market. With this in mind, we start following the EUR/JPY pair today. (Don’t worry – if the EUR/CHF starts moving again, we will analyze it.)
The EUR/JPY pair is currently hovering around the 100 level, and as a result we think there is a lot of “deciding” going on in this pair at the moment. The area is a natural area of inflection because of the “large round number” aspect of it. Because of this, it is absolutely no surprise to see it here.
The area looks to be vital, but the idea of the Euro breaking out to the upside is probably a bit of a stretch, as there are a lot of issues in the European Union that aren’t even being addressed at the moment. Because of this, we prefer selling, and a break of this range would do it. For our money – this means selling sub-98.50 or so.