The downtrend on EURJPY seems to be over, as price formed a double bottom pattern on its 1-hour time frame and broke past the neckline resistance around 137.00. The pair is climbing past the 138.00 handle and may have a couple hundred more pips to go.
As you can see, the chart pattern spans from the 134.00 area to 137.00, which suggests that the potential uptrend might last by as much as 300 pips. Stochastic is already in the overbought area though, which means that buying pressure is fading. At the same time, price is stalling around the 200 SMA resistance.
MACD is indicating that a bit of buying momentum is still present and that a few more gains might be possible. However, a selloff could take price back to the neckline, which is close to the 100 SMA support area. Bear in mind though that the short-term SMA is moving below the long-term SMA, which indicates a downtrend.
There are no major event risks for this trade today, as there are no reports lined up from the euro zone and Japan. Risk sentiment might be crucial in determining whether the uptrend could carry on or not, particularly with the FOMC statement coming up.
By Kate Curtis from Trader’s Way