The EUR/JPY pair did almost nothing during the session on Monday, which of course isn’t much of a surprise. After all, traders are generally away from their desks, and focus more on the New Year’s holiday than anything else. However, it doesn’t mean that you can’t read anything into this chart at the moment. Quite the contrary, I see the 145 level as a significant barrier for the buyers to overcome. However, you can definitely see that the market has certainly found itself much stronger to the positive side since the end of October, and as a result I do think that the buyers will eventually win out and conquer the 145 barrier.
The shape of the Friday candle has, intention mainly because it is a nice-looking shooting star at an area that we need to see one at. Nonetheless, I think that the 143 level below is going to be rather supportive, and therefore any pullback should find a lot of buyers stepping into the market in that general vicinity. That would be an excellent place to start buying supportive candles if and when we get them. On the other hand, a break of the Friday shooting star would of course be bullish as well, and perhaps signify another impulsive move higher.
Bank of Japan
While the European Central Bank is still a little bit of a wildcard as far as what they want to do about potential deflation, the Bank of Japan is a known entity. It is well known that the Bank of Japan is trying to devalue the Yen in general, and is starting a new aggressive monetary policy of loosening. This of course is very negative for the Yen, and as a result I believe that the Yen will depreciate over the balance of time, and this pair of course will be any different.
On a break of the top of the shooting star from Friday, I think this pair goes and searches for 150. However, I should reiterate that I do prefer a pullback to the 143 level in order to build up enough momentum to break out. Moves like that tend the last longer.
