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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 141.23 (channel top), 140.89 (38.2% Fib ret.)
- Resistance: 142.00 (23.6% Fib ret.), 143.01 (trend line)
The Euro declined as expected against the Japanese Yen after the pair produced a Shooting Star candlestick pattern below a falling trend line set from late December. Sellers are testing minor channel top resistance-turned-support at 141.23, with a break below that eyeing the 38.2% Fibonacci retracement at 140.89. Near-term resistance is at 142.00, the 23.6% level. A reversal back above that aims for the trend line (now at 143.01) anew.
Risk/reward considerations argue against entering short with prices trading in close proximity to relevant support. On the other hand, taking up the long side looks premature absent a defined bullish reversal signal. With that in mind, we will remain flat for now.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com