EURJPY appears to have found support at the 200 simple moving average, which is close to the 61.8% Fibonacci retracement level on the 4-hour time frame. Weak euro zone inflation data sparked a round of euro selling in yesterday’s London session, but mixed Tankan survey results from Japan in today’s Asian session led to a bounce.
Price could continue to head back up now that the 138.00 handle has held as support as well. A break above the 100 SMA could confirm that further gains are likely, possibly until the previous highs near the 141.00 handle. MACD and stochastic are reflecting the pickup in buying momentum.
On the other hand, a break below these recent support levels could lead to a stronger round of euro selling, which could push EURJPY back down to the previous lows at the 136.00 handle.
Going long at market with a stop below the 61.8% Fibonacci retracement level and a target at 141.00 could yield a high return-on-risk for a technical trade.
By Kate Curtis from Trader’s Way www.tradersway.com