EUR/JPY Technical Set-Up for Christmas

EUR/JPY Technical Set-Up for Christmas
Potential Trade Set-Up for Christmas
Potential Trade Set-Up for Christmas Getty Images

The Euro versus Japanese yen forex pair (EUR/JPY) has been rising this week, trading to new fifty-two week high's; but since then, this market has begun to lose some momentum. The recent pattern for the last several weeks this autumn has been for the price to move to the top of the range and then trade back down to the 131.80 area, which is the bottom of the autumn range.

Using the thirty-minute candlestick below, we will take a look at some technical views for this market that should be relevant for today and perhaps for several days to come.

Based on the recent pattern, we hold a bearish view of this market, especially if the market remains under the yellow trendline currently at 134.40 price level.

However, if bulls are able to push above that level, the next resistance area above the yellow trendline would be from 134.75 to 134.90. If the bulls do make new highs, we would use the 23.6% extension of this week’s range at 135.52, shown by the lavender price marker, as our next bullish target.

To the downside, bears will have to work through a few important levels.  The first is marked by the orange trendline at 134.05 drawn from Monday’s low to Tuesday’s low this week.  The next important level would be the blue shaded zone from 133.80 to 133.90.  This zone offers both a target and some potential support.

If this market breaks below that range, the next lower target would be the 133.61 low from Tuesday marked by the green line.  Just below that is the 50% retracement of this week’s range, marked by the light blue line at 133.51.  This would be the line in the sand for bulls to hold.

If bears were to push the EUR/JPY through that 133.51 level, then we would expect a total retracement of this week’s gains, first targeting Tuesday’s low marked in red at 132.56, and then targeting this week’s current low at the 132.19 area.

The next week’s economic calendar from the European Union and Japan is extremely quiet with Christmas next week and as New Years approaches. There is some light data on Thursday the 28th early in the session out of Japan, but that Industrial Production figure should not be a much of a market mover even though it is the most relevant item on the calendar.

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