Weekly
• Last Candlesticks pattern: Hammer
• Time of formation: 19 Sep 2016
• Trend bias: Down
Daily
• Last Candlesticks pattern: Doji
• Time of formation: 28 Mar 2017
• Trend bias: Near term up
EUR/JPY – 123.39
Although the single currency traded lower yesterday and initial downside risk remains for the erratic decide from 125.82 top to extend weakness to 122.00, reckon downside would be limited to 121.60-65 (38.2% Fibonacci retracement of 114.85-125.82) where renewed buying interest should emerge, bring another rise later, above 124.00-05 would suggest low is possibly formed, bring rebound to 124.70-75, break there would add credence to this view, then further gain to 125.31 would follow. 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 weakness to 122.40-50 and then 122.00-10 cannot be ruled out, reckon downside would be limited to 121.60-65 (38.2% Fibonacci retracement of 114.85-125.82) and bring another upmove later to aforesaid upside targets. 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, bring rebound later.
Recommendation: Buy at 121.60 for 124.60 with stop below 120.60.
On the weekly chart, as the single currency traded narrowly after meeting resistance just below recent high of 125.82, retaining our view that further consolidation below this level would be seen, however, reckon downside would be limited to 122.00 and 121.50-60 should hold, bring another rise later, above 125.82 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 price should falter below 129.60-65 (50% Fibonacci retracement of 149.79-109.49) and price should falter below psychological resistance at 130.00, bring retreat later this month.
On the downside, although initial pullback to 122.40-50 and possibly 122.00 cannot be ruled out, reckon downside would be limited and renewed buying interest should emerge around 121.60-65 and bring another rise later. Only below support at 120.60 would defer and risk weakness to the Kijun-Sen (now at 120.34) and then 120.00 which is likely to hold on first testing. Looking ahead, euro needs to penetrate indicated support at118.92 to shift risk to the downside for further fall to 118.00, however, downside should be limited to previous resistance at 117.82 and bring rebound later. A weekly close below 117.82 would suggest first leg of rebound from 114.85 has ended, bring weakness to 117.00 but price should stay above 116.20-25, bring another rebound later.
