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)
Risk Warning - Your capital is at risk - Losses can exceed deposits
Trading spot foreign exchange and futures on margin carries a high level of risk and may not be suitable for all investors. You may lose all your capital. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in spot foreign exchange or futures you should carefully consider your investment objectives, level of experience, and risk appetite. If you are in any doubt about investment or the mechanics of such products, you should seek independent financial advice
