The EUR/JPY pair fell during the session on Thursday, as the Chinese HSBC Flash PMI numbers came out just under 50. This of course signals that there is a bit of a contraction going on in Chinese manufacturing, and this have the markets panicking the overall. After all, if the Chinese are producing as much, the question then is asked of global growth. This is a highly sensitive pair when it comes to risk appetite out there, and as a result the Japanese yen was brought up.
However, we found the 130 level to be extraordinarily supportive. The fact that this market bounced off of it almost to the exact pip suggests to me that the 130 level is now the floor in this market. The resulting candle is a significant looking hammer, which was preceded by a shooting star. In other words, I think the buyers are going to go on and try to take out the top of this shooting star.
137 is still the target
Based upon the ascending triangle that we had recently broken out, I still think that the 137 level will be targeted. Quite frankly, based upon longer-term charts, I can even make a case for the 150 level. That being said, I only buy this market, and I have aptly no interest in buying the Japanese yen overall based upon the Bank of Japan. I think as long as we stay above the 130 level, any dip in this pair will simply be a buying opportunity.
Based upon the ascending triangle measuring, I think that the 137 level could offer a bit of resistance, but quite frankly any fall from that level will more than likely be bought up a couple of handles lower. I think this is a long-term trend that has formed, and that we have reentered the previous days of 2005 when it was simply as easy as buying this market every time it fell. Going forward, I will be adding every time it dips and trying to build a huge position.