Weekly
• Last Candlesticks pattern: Window
• Time of formation: 24 April 2017
• Trend bias: Up
Daily
• Last Candlesticks pattern: Hammer
• Time of formation: 18 May 2017
• Trend bias: Up
EUR/JPY – 131.50
As the single currency staged a strong rebound after holding above support at 129.37 and broke above previous resistance at 131.71, signaling recent upmove has once again resumed and upside risk remains for further gain to 132.50-60, however, near term overbought condition should limit upside to 133.10-15 (61.8% projection of 122.40-131.40 measuring from 127.56) and reckon 133.50-60 would hold from here, price should falter well below 134.00-10, risk from there has increased for a retreat to take place later.
On the downside, whilst initial pullback to 131.00 is likely, reckon the Tenkan-Sen (now at 130.69) would limit downside and bring another rise later. Below 130.25-30 would bring test of the Kijun-Sen (now at 129.79) but only break of said support at 129.37 would signal top is formed instead, bring retracement of recent rise to 129.00, then towards 128.45-50, however, break of latter level is needed to retain bearishness and encourage for subsequent weakness towards support at 127.56 which is likely to hold from here.
Recommendation: Stand aside for this week.
On the weekly chart, despite last week’s retreat to 129.37, as the single currency found decent demand there and has risen again, suggesting the erratic upmove from 109.49 (2016 low) is still in progress and may extend headway to previous chart resistance at 132.33, however, overbought condition should limit upside to 133.10-15 (61.8% projection of 122.40-131.40 measuring from 127.56) and reckon 134.40 (61.8% Fibonacci retracement of entire fall from 149.79-109.49) would hold, price should falter well below135.00-10, risk from there is seen for a retreat to take place later.
On the downside, expect pullback to be limited to 130.90-00 and the Tenkan-Sen (now at 129.79) should hold, bring another rise later. A drop below said support at 129.37 would suggest a temporary top is possibly formed, bring weakness to 128.90-00, then towards 128.00-10 but only break of previous support at 127.56 would confirm, bring retracement of recent upmove to 126.70-80, then towards 126.00-10 but previous resistance at 125.81 should turn into support and limit euro’s downside.
