The EUR/JPY pair fell most of the session on Friday, but as you can see bounced hard enough to form a hammer. This has been formed right around the 133 handle, which of course is a large round number and as a result it makes sense that the market would recognize this as a vicinity where the buyers could come in and step up. That being said, it is not a major large round number, so I am a little bit cautious.
However, it is in an uptrend, so this market is certainly one that is a "buy only" pair. That being the case I feel that this market will continue to go higher, and the right way to go will be a break of the top of the hammer, which is a classic a buy signal as far as far as technical analysis is concerned. Because of this, I believe that this market will head back towards the 135 level, but don't expect it to necessarily be a clear-cut case. A lot of choppiness will probably be the norm going forward, and because of that I feel that the market will be positive, but you will have to have a little bit of wherewithal in order to hang onto the position.
This market tends to follow risk appetite.
Pay attention to the stock markets around the world, simply because the stock markets tend to show what the risk appetite around the world is. After all, investors won't buy into stocks and less they feel comfortable with the investing environment. With that being the case, pay particular attention to the Nikkei at the open on Monday, as it could set the tone for the next couple of sessions.
As far as shorting is concerned, I have no interest in doing so in this market even though a break of the hammer’s bottom would be a bearish signal. That's because there is so much noise between here and the 131 handle, I feel that the buyers will eventually stepped then even under those circumstances regardless of how bearish that would look.