• Last Candlesticks pattern: Hammer
• Time of formation: 19 Sep 2016
• Trend bias: Down
• Last Candlesticks pattern: Doji
• Time of formation: 28 Mar 2017
• Trend bias: Near term up
EUR/JPY – 124.28
Although the single currency fell briefly to 122.40 late last week, the subsequent rebound suggests consolidation above this level would be seen and gain to 125.31 resistance cannot be ruled out, however, break there is needed to signal the pullback from recent high of 125.82 has ended, bring retest of this level later. Having said that, only a break of previous chart resistance at 125.82 would confirm recent upmove has resumed and extend subsequent headway to 126.50-60, then 127.00-10.
On the downside, whilst initial pullback to the Tenkan-Sen (now at 123.53) cannot be ruled out, reckon 123.00-10 would hold and bring another rise later to aforesaid upside targets. Only below said support at 122.40 would risk correction of recent upmove to 122.00-10, however, still reckon downside would be limited to 121.60-65 (38.2% Fibonacci retracement of 114.85-125.82) and bring another upmove later. Below indicated previous support at 120.60 would abort and signal a temporary top has been formed, bring retracement of recent entire rise to 120.30-35 (50% Fibonacci retracement) and then 120.00 but reckon downside would be limited to 119.40-50 and price should stay above indicated support at 118.92.
Recommendation: Buy at 123.55 for 125.55 with stop below 122.55.
On the weekly chart, the single currency has remained confined within near term narrow range and further sideways trading would be seen, however, reckon last week’s lo at 122.40 would limit downside and bring another rise, above 125.31 resistance would signal the pullback from 125.82 has ended, bring retest of this recent high break there would extend the erratic rise from 109.49 low to 126.45-50, then towards 127.40-50 but reckon another previous resistance at 128.23 would limit upside and 129.60-65 (50% Fibonacci retracement of 149.79-109.49) should hold, price should falter below psychological resistance at 130.00, bring retreat later.
On the downside, although initial pullback to 123.50-55 cannot be ruled out, 122.37-40 (current level of the Tenkan-Sen and said support) should hold and bring another rise later. Below 122.37-40 would defer and risk weakness to 121.60-65, however, reckon downside would be limited to 121.00 and the Kijun-Sen (now at 120.34) should remain intact, bring another upmove later. A weekly close below the Kijun-Sen would defer and risk correction to 120.00, however, euro needs to penetrate indicated support at 118.92 to shift risk to the downside for further fall to 118.00 but downside should be limited to previous resistance at 117.82 and bring rebound later.