EURJPY Pushing Up on Resistance 38.2%/200day – Could Continue Higher

EUR/JPY Breaks Out, Eyes Higher Levels

EUR/JPY (daily chart) as of Tuesday (7/05/2011) has tentatively broken out above a descending resistance trendline extending back to the April 123.30 high. This trendline is part of a descending triangle consolidation pattern. The current pattern breakout occurs after price action formed a double-bottom around 113.50, which forms the bottom border of the noted triangle.  Not only has price made a tentative breakout above the triangle, it has also approached the peak of the double-bottom formation, just shy of the 118.00 price region. In the event of a breakout above this resistance level, price will have confirmed the triangle breakout, with a key further resistance target to the upside residing around the 120.00 price region. Strong support continues to reside around the 115.50 price region.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD

EURJPY tests resistance against trendline

The EURJPY has moved higher in Far East trading but has topside resistance to fight. The trendline comes in at the 119.00 level currently. The high for the new day peaked at 119.05.  The corrective move off the high held nicely against the 38.2% area (118.745 vs low at 118.72). The subsequent move higher to 118.90 looks as if a test of the 119.00 is likely.  A break of the 119 and then the 119.05 level should lead to further buying interest with the key 100 hour MA at the 119.29 level (currently) being the next level to target.

EURJPY moves toward 200 hour MA resistance

113.61 is the 200 hour MA target.  This level may provide some profit taking resistance or slowing of the surge higher for the cross pair.

If profit taking and resistance hold, the price can correct down to the 113.36 and 112.75.

EURJPY runs into trendline resistance

EURJPY consolidating between the “Goal Posts”

I define the “Goal Posts” as the space between the 100 and 200 bar MA. In the chart above the 100 (blue line in the chart above) and 200 bar MA (green line) are 40 or so pips away from each other. Over the last 10 hours, the price has been ranging between the two MA levels. In other words,  it has traded between the Goal Posts. 

With the price currently below the 100 hour MA, the bias is to the downside, but until the 200 hour MA is broken, traders will use the MA level as a borderline to buy against.  Keep an eye on the level.  A break should lead to further selling. If the 200 bar MA level can not be broken, look for the shorts to cover by buying with the 100 bar MA the target.  The longer the pair consolidates between the MA, levels, typically the tighter the spring becomes until the market price breaks.

EURJPY tests topside resistance now

After testing the 100 hour MA and trendline support earlier in the NY session (at 112.24 area), the pair is now back higher testing the trendline resistance at the 112.68 level. Both levels today are important. A break of either should lead to further momentum in the direction of the break.

EURJPY testing 100 hour MA support. Is it time to break down? Or will support hold again?

The EURJPY is down testing the 100 hour MA support level at the 110.40 level. Earlier the moving average was tested but could not solicit selling interest. With the USDJPY reaching new lows and now through the 81.96 support, this is pressuring the pair. The question is, can the EURUSD also break through intraday support at the 1.3486 level. If selling pressure materializes, the combination could be right for a wander down for the pair.

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