• Last Candlesticks pattern: Window
• Time of formation: 24 April 2017
• Trend bias: Up
• Last Candlesticks pattern: Hammer
• Time of formation: 18 May 2017
• Trend bias: Up
EUR/JPY – 128.19
As the single currency has surged this week and broke above previous resistance at 125.82, adding credence to our bullish view that medium term rise from 109.49 low is still in progress, hence upside bias remains for this move to extend further gain to 129.00-10, then 129.45-50 (100% projection of 109.49-124.10 measuring from 114.85), however, near term overbought condition should prevent sharp move beyond psychological resistance at 130.00 and reckon 130.50-60 would hold from here, risk from there has increased for a retreat to take place later.
On the downside, whilst initial pullback to 127.45-50 cannot be ruled out, reckon downside would be limited to 126.90-00 and the Tenkan-Sen (now at 126.25) would hold, bring another upmove later to aforesaid upside targets. A daily close below the Kijun-Sen (now at 125.62) would defer and suggest a temporary top is possibly formed instead, risk correction to 125.00-10, then 124.45-50, however, reckon downside would be limited to 124.00-10 and price should stay above support at 123.66, bring another upmove next month.
Recommendation: Buy at 127.00 for 129.50 with stop below 126.00.
On the weekly chart, this week’s rally above previous resistance at 125.82 looks set to form a long white candlestick, suggesting the medium term rise from 109.49 low has resumed and bullishness remains for this move to extend further gain to 129.00, then 129.45-50 (100% projection of 109.49-124.10 measuring from 114.85), however, reckon upside would be limited to psychological level at 130.00 and 131.00 should hold, the single currency should falter well below previous chart resistance at 132.33), risk from there is seen for a retreat to take place later.
On the downside, although initial pullback to 127.00-10 cannot be ruled out, reckon 126.50 would limit downside and euro shall head north again from there to aforesaid upside targets. A drop below said previous resistance at 125.82 (now support) would defer and risk correction to 125.00, then towards 124.50, however, still reckon downside would be limited to 124.00 and support at 123.66 should remain intact, bring another rally in Q3.