By: Doug Rosen
EUR/JPY pair continues its bearish trajectory to the downside, however, this pair is approaching areas where profit taking may soon come into play.
On the Daily chart we are riding the 5 ema gracefully downward but stochastics is now in the oversold zone. The 4 Hour looks a lot like the daily, we are riding the 5 ema, however, we are bouncing off the lower Bollinger Band. At the same level we are bouncing off the lower Bollinger band we are also bouncing off last week's low.
Looking at the 15 minute chart I see confirmations that price may be rolling to the upside. This may very well be just an expected retracement, we will have to wait and see. If price was to break the daily central pivot point, I would look for it to go to the 104.50 area, then pullback to the daily central at 104.26, watch for some green then take a long with a tight stop loss just below the daily central pivot.
Conversely, price may just touch the daily central pivot then begin its continuation to the downside. Keep in mind that the 4 hour 21 ema is at 104.62 level which overlaps with the monthly S2 Pivot as well as a descending trend line so this may be an area to take profit if in a long and may very well be a decent area to consider a short and the zone between 104.40 - 104.60 is heavily saturated with resistance so it is a good area to take profit and a good area to look for shorts.
Keep an eye open when price reaches the 103.70 zone, I expect profit taking to occur as well as bulls placing buy orders. Whenever trading this pair keep an eye on the stock market.
Watch the DAX and the FTSE.