The EUR/JPY pair fell during the session on Monday, which of course wasn't a big surprise me considering that we formed a shooting star for the Friday trading session. The shooting star with at the top of the recent consolidation area, so this simply looks like a return to that as far as I can tell. There is a much larger consolidation area going from 1.3 3 all the way down to the 1.28 handle. It's been summertime, and that of course means low liquidity, which of course can mean a lot of bouncing back and forth. I think that's essentially what happened here.
The 130 level below though should be rather supportive, and that more than likely will be where I'll be looking to buy on signs of support. After all, we are getting close to the end of the summer, which means the big money will be coming back into the marketplace. The Bank of Japan is still looking to crush the value of the Yen, and the European Union has just recently pulled out of recession again. Because of this, it makes perfect sense to see this pair go higher.
133
I think if we can get a daily close above the 133 handle, this pair will absolutely check out to the upside. On the other hand, I do like that pullback to the 130 handle as well, as it has been so supportive and resistive in the past. Nonetheless, in the meantime I still have an upward bias so I am not selling this pair even though it has fired off a sell signal technically. I have learned over time to simply pick a direction and trade it that way.
I believe that there is still plenty of upside in this marketplace, and as a result I am only buying. In fact, in order to get me to start selling we would have to break down well below the 128 handle, something that I don't see happening anytime soon. Below there, I see quite a bit of support all the way down at 125 is well, which I think is the "line in the sand" for the Bank of Japan.
