EUR/JPY price analysis: levels under the 78.6% pullback of 115.26 found buyers

Risk appetite also deteriorated sharply as markets had priced in a strong recovery

Market highlights from the last week

Thursday 4 June: Overall risk appetite remained robust despite slight corrective losses for the main global indices, with fresh buying late in Asia

Friday 5 June: The US employment data provided a substantial shock with non-farm payrolls registering an increase of 2.51 millon on the month from a revised decline of 20.7mn the previous month

Monday 8 June: The Euro-zone Sentix investor recovered to -24.8 for June from -41.8 the previous month 

Tuesday 9 June: There was a slightly more cautious tone surrounding risk appetite on Tuesday with markets monitoring global recovery prospects

Wednesday 10 June: Risk appetite also deteriorated sharply as markets had priced in a strong recovery and adopted a more sober attitude following the Fed rhetoric

EUR/JPY Price Analysis

Let us have a look at the technical viewpoint: 

Monthly: Levels under the 78.6% pullback of 115.26 (from 109.20-137.51) found buyers. We posted a bullish outside month in May. This often indicates the end of a trend and the start of a new upward bias. 

Weekly: Broken out of the channel formation to the upside. Reverse trend line support is located at 119.68

Daily: The 261.8% extension level is located at 125.16 (from 114.39-118.52). Sellers emerged at 124.43. We have posted an Evening Doji Star. This often highlights the end of a trend and the start of a new downward bias. The Marabuzo level from the 8th June is located at 123.10. Support located at 120.81. The 50% pullback level from 114.38-124.43 is located at 119.43, close to reverse trend line support

Intraday 4-hour: The 61.8% pullback level from 124.43-120.81 (projected support) is seen at 123.06. This is close to the daily Marabuzo 

Outlook: Expected choppy mixed and volatile trading. We are moving lower in the corrective formation toward reverse trend line support

Possible trade setup: 

Action: Selling at 123.06

Stop: 123.76

Targets: 119.70 and 119.40

Potential return on risk to first target:  R4.8 (reward 336 / risk 70)

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