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Resistance And With Room To Fall

EURJPY At Resistance And With Room To Fall

EURJPY, Weekly

As EURUSD moved higher last week, EURJPY rallied very strongly and reached the February highs. Last week’s close was inside the weekly pivot candle from February this year, roughly the same area that was earlier defined by October 2014 pivot low. As reaction to previous pivot levels and today’s price action now proves this area has psychological significance. The nearest support and resistance levels are 131.30 and 136.85. The 50% Fibonacci level coincides roughly with the 131.30 support. This is quite far away from the current price and therefore suggests current levels are good for those looking for shorting opportunities. Earlier today EURUSD has been reacting lower from a resistance while JPY has been slightly stronger than its peers across the board. With EURJPY also trading lower from a resistance this should be a good time to be bearish on EUR and bullish on JPY.

EURUSD D

EURJPY, Daily

On Friday EURJPY hit resistance just above 135.02 and turned lower. This resistance was created by a pivot candle from February 11th and now price is trading 0.49% below the close from Friday. Stochastics is overbought and about to roll over while the pair has been trading outside the Bollinger Bands and is now edging close to the upper 2 stdv band. A close below the band would be a further confirmation of bearish mood in EURJPY. The nearest daily support level is at 131.29 with the 50% Fibonacci level and 50 day SMA not that far behind at 130.75 and 130.32 respectively. Movements below 38.2% Fibonacci level at 131.81 should be monitored for momentum reversal signals.

EURUSD 240

EURJPY, 240 min

As the pair has moved lower the Stochastic Oscillator has declined to overbought levels. However price is now trading below 134.23, a level that used to be an intraday support and should now act as a resistance. Nearest intraday support level is at 132.46 where lower Bollinger Bands and an old channel high coincide. The next support area consists of April 6th pivotal resistance area between 130.40 and 131.29. Currently the 50 period SMA is also inside area.

Conclusion

The pair is overbought in higher timeframes and in resistance which indicates it’s time for it to correct lower. At the time of writing EUR is weak against all the major currencies while JPY is holding up against all the others but CAD. This combined with the technical weakness in EURJPY suggests that the trading opportunities in this pair are in the downside. EURUSD being weak at resistance is also supporting the bearish view. My target one in for short term trades is at 131.50 and target 2 at 130.40.

Trade these levels only if price action at the levels confirms my analysis. If you don’t know how to read price action, please join me to our free webinars and learn how to take your trading to the next level. Register here for FREE!

2015-04-30_1441


Janne Muta
Chief Market Analyst
HotForex

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Monday, 04 May, 2015 / 10:20

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