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Talking Points:
- EUR/JPY Technical Strategy: Flat
- Support: 138.00, 137.28, 136.10
- Resistance: 139.18, 139.74, 140.69
The Euro may be topping against the Japanese Yen following the formation of a bearish Dark Cloud Cover candlestick pattern. A daily close below 138.00, the intersection of the 14.6% Fibonacci expansionand a recently broken channel top, exposes the 23.6% level at 137.28. Alternatively, a turn above the September 12 high at 139.18 opens the door for a challenge of the 50% Fib retracement at 139.74.
On one hand, last week’s channel break argues in favor of an upside scenario and calls for entering long on a corrective pullback. On the other, buying the Euro seems disadvantageous considering firmly dovish posture at the ECB. With that in mind, we will remain flat pending confirmation of a larger bearish reversal and look to enter short thereafter.
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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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