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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 135.80, 135.16, 134.13
- Resistance: 136.84, 137.67, 138.51
The Euro corrected lower against the Japanese Yen having rallied as expected following the formation of a bullish Piercing Line candlestick pattern. Near-term resistance is at 136.84, the 38.2% Fibonacci retracement, with a break above that on a daily closing basis exposing the 50% level at 137.67. Alternatively, a turn below the intersection of a formerly broken channel top and the 23.6% Fib at 135.80 clears the way for a test of the 14.6% Fib at 135.16.
Risk/reward considerations argue against entering short with prices in close proximity to support. On the other hand, the absence of a defined signal indicating bullish resumption suggests taking up the long side is premature. We will remain flat for now, waiting for a more actionable opportunity to present itself.
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Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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