The EUR/JPY pair fell during the session on Friday, but as you can see we found enough support above the 140 level to turn things back around and form a hammer. This hammer of course suggests that there is plenty of support below, and as a result we could very well find buyers. Because of that, I feel that this market will more than likely head to the 143 level or so over the next several sessions, and would be buying on a break above the top of the hammer as it is a classical technical analysis signal.
The thing is that I see quite a bit of support below, going all the way down to the 138.50 region. That being the case, it does not surprise me at all that the buyers will step in here, but even if the market falls down below the 140 handle, I believe that there will be plenty of buyers down there in order to turn things back around. After all, this is a pretty thick consolidation area that the market will more than likely see plenty of action.
Risk appetite will drive this market
Risk appetite is one of those variables that pushes this market much higher or lower, depending on how the world is behaving at the moment. The hammer that formed on the Friday session suggests that perhaps we will have buyers and a good “risk on” type of attitude in the markets going forward. If that’s the case, then I see no reason whatsoever why this market will continue to go higher. In fact, I believe that the 143 level will be targeted first, but then we will smash through and head to the 145 level. It might take some time, but ultimately what I think we break above that area as well. Pullbacks should continue to offer buying opportunities, and I will continue to treat them as such. Selling is not an interested me at all until we get well below the 138.50 level, something that doesn’t look very likely at the moment.
