EUR/JPY had a strong and impressive rally during the Friday session as the US jobs figures came out much stronger than expected, showing an addition of 165,000 jobs during the month of July. As this pair is typically a "risk barometer" type of pair, it makes sense that it rallied as traders lifted some of their pessimism.
However, we should note that the 97.25 level is the beginning of massive resistance all the way to the 101 handle. With this being said, much like the EUR/USD pair, I think that there is a strong chance we will see an excellent shorting opportunity soon. In the last 48 hours of trading, there simply hasn't been any type of solution arrives in the Euro, and because of this the knee-jerk reaction should simply be a fading of the rally waiting to happen.
Many clusters ahead
When looking at this pair on the various time frames, I cannot help but notice that there are many clusters of resistance and orders all the way up to the 101 handle. But the long way to go in order to bust through a lot of resistance, and it is because of this that I am more than willing to wait for a nice looking at bearish candle from which to sell.
Of special interest is the 100 handle, mainly because it is such an obvious "large round number" for traders to focus on. Many of the large shops tend to place their orders at these large numbers, and as such it makes sense that the true decision on market direction will be made closer to that level. However, if the 97.50 level holds prices down, we may have a shorting opportunity much sooner than I anticipated.
With the markets excitement over the US jobs number, and the fact that the ECB could possibly be getting closer to some type of solution being implemented, it makes sense that we had a massive short covering rally. Whether or not it was new fresh Euro buying maybe another question, and truthfully it's almost impossible to tell. Nonetheless though, in the long run Europe has a lot of work to do still. It is because of this that I believe the resistance cluster above us will eventually produce a selling signal that should be quite strong.