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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 139.83-93 (38.2% Fib ret., Feb 11 close), 139.31 (horizontal pivot)
- Resistance: 140.73-95 (Jan 13 close, 50% Fib ret.), 142.07 (61.8% Fib ret.)
The Euro may readying to decline against the Japanese Yen after prices formed a Harami candlestick pattern below resistance in the 140.73-95 area, marked by the January 13 close and the 50% Fibonacci retracement. Near-term support is in the 139.83-93 region, defined by the 38.2% Fib and the February 11 close. A break below that aims for a horizontal pivot at 139.31, followed by the 23.6% retracement at 138.45. Alternatively, a push above resistance targets the 61.8% level at 142.07.
On balance, a Harami pattern is a relatively weak signal and it seem prudent to wait for confirmation of follow-through on a break below support before committing to a short position. As such, we will remain on the sidelines for now.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com