EUR/JPY price analysis: rallies to find sellers
EUR/JPY price analysis: ample scope or a move to the upside. However, with a zone of resistance seen at 127.72-127.80, we look to sell into rallies
Market highlights from the past week:
Tuesday September 8: risk appetite dipped again during Tuesday, especially in the New York session, with unease over global recovery trends.
Wednesday September 9: coronavirus developments were monitored closely during the day with the US reporting over 1,100 deaths for the day, which took the total to above 190,000.
Thursday September 10: the ECB made no changes to interest rates at the policy meeting and there were also no changes to the quantitative easing programme with bond purchases continuing under the PEPP scheme.
Friday September 11: there was some relief on the coronavirus vaccine front with the AstraZeneca/Oxford trial resuming next week.
Monday September 14: there were no major data releases during Monday with activity contained ahead of Wednesday’s Federal Reserve policy meeting.
EUR/JPY price analysis:
Let’s have a look at the technical viewpoint:
Monthly: levels under the 78.6 per cent 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 (over the long-term). We have posted four months of net gains.
Weekly: the 50 per cent pullback level is located at 125.95 (from 137.51-114.40). The trend of lower highs is seen at 127.44.
Daily: resistance is located at 127.76. Trend of higher highs is located at 127.80. Looks to be forming an “Ending Wedge” pattern that has an eventual bias to break to the downside.
Intraday four-hour: we have a Fibonacci confluence area at 127.72-127.79. This is:
1. A 127.2 per cent extension of the 124.42-127.08 move
2. A 161.8 per cent extension level of the 124.42-126.46 move
Outlook: ample scope or a move to the upside. However, with a zone of resistance seen at 127.72-127.80, we look to sell into rallies.
Possible trade set-up:
Action: selling at 127.70 (in front of the resistance zone)
Target: 124.50 (support)
Potential return on risk to first target: R4.4 (reward 220 / risk 50)
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