The EUR/JPY pair fell during the Friday session, testing the 130 handle yet again. Over the last week and a half or so, the 130 level has offered significant support and it appears that it's ready to continue doing so. Looking at this chart, you can see that I have outlined an ascending triangle that we have broken out of recently in this vicinity, and it simply looks like the market is testing previous resistance as support now.
Also, it should be noted that the Euro did fairly well late in the day on Friday, so this pair really could pick up some traction at this point. Regardless, it appears that we are going to bounce around between the 130 and the 132 handles in the short term, and with that being the case I feel that this market is a buy down at these levels.
Weekly shooting star
The one caveat of course is the fact that there is a weekly shooting star in this pair. However, this shooting star is sitting on top of where there were hammers formed on the weekly chart during the ascending triangle, so I believe that if nothing else this is just simply the market winding itself up. I see aptly no reason why this pair should continue to break down, and quite frankly this is without a doubt a stronger signal if we can break the top of the weekly shooting star which is roughly at the 132.25 level.
If we were to break the top of that, this could be an explosive move higher. Nonetheless, based upon the triangle that we have broken out of recently, we fully expect to see this market hit at least 136 which of course it hasn't done yet. Ascending triangles are fairly common and reliable signals, and the fact that the Bank of Japan is working against the value of the Yen suggests that this market should hit at least that level, if not higher ones. In fact, based upon longer-term charts there is a bullish flag that suggested previously that this market could go as high as 150.
