EUR/JPY initially attempted to rally on the start of the Wednesday session, only to be turned around after the Federal Reserve failed to give the markets the "sugar high" that everybody seemed to want. This is indicative of a very dysfunctional marketplace as stock markets, futures markets, and currency markets are now moving on central bank sentiment rather than anything related to economies.
However, we do have some sense of relative normalcy in the fact that the Euro does continue to selloff. In this particular pair, there is often a nice correlation between the risk appetite of the global trading community and this pairs movements. Because of this, it was no real surprise that the pair absolutely tanked after the Federal Reserve disappointed the markets.
The shape of the candle is a shooting star, and this does suggest that lower prices are to be found. I believe that during this very important trading session, we will see the European Central Bank do something to weaken the Euro overall. They will either completely disappoint the markets, and this pair should tank, or we could see some type of central bank policy in order to weaken the currency. At first, we could even get a knee-jerk reaction higher as the market shows its approval of simulative action out of the ECB. However, I believe that eventually the markets will pay attention, and realize that the Euro will be weakening as they print more of them.
Shooting star, aiming for 94
With the shooting star being printed for the Wednesday session, it looks to me like many of the traders out there will have already been lining up for the plunge after the announcement. I see the lows from the Monday session as being a signal to start selling again. Once we break the 95.50 level, I believe that there is essentially a vacuum down to the 94 handle.
I will be selling this pair, I just don't know exactly when. It will be after the announcement certainly, but I don't know if it will be because of a poor reaction to it, or fading some type of knee-jerk reaction higher. Nonetheless, I see this pair is only going lower, and the fact that it failed at the 96.50 level suggests the same thing.