In this series, we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. The Japanese Yen is the strongest performer versus the US Dollar year-to-date with EUR/JPY down 4.44% since December. The rally off the yearly lows turned sharply last week and IF the recovery is to remain viable, price needs to find nearby support in the coming days. Here are the key targets & invalidation levels that matter on the EUR/JPY weekly chart.
EUR/JPY WEEKLY PRICE CHART
Notes: EUR/JPY reversed off confluence resistance last week near the 132-handle where 52-week moving average converges on basic slope resistance. The pullback is now approaching a key support zone 128.80-129.17 – a region defined by the long 200-week moving average, the 38.2% retracement of the May advance and former channel resistance. Resistance remains steady at 132 with bearish invalidation set to the 61.8% retracement at 132.58.
Bottom line: EUR/JPY reversed from confluence up-trend resistance last week and although the immediate focus is lower, we’re looking for possible exhaustion/support on a move into 128.80-129.17. From a trading standpoint, look to reduce short-exposure there and be on the lookout for possible long-entries. There’s no clear setup here just yet- I’ll publish an updated EUR/JPY Scalp Report in the days ahead once we get some more structure in near-term price-action.
EUR/JPY TRADER SENTIMENT
- A summary of IG Client Sentiment shows traders are net-short EUR/JPY- the ratio stands at -1.18 (45.8% of traders are long) – extremely weak bullish reading
- Traders have remained net-short since June 4th; price has moved 1.9% higher since then
- Long positions are 3.8% higher than yesterday and 59.4% higher from last week
- Short positions are 16.8% lower than yesterday and 32.8% lower from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/JPY prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/JPY price trend may soon reverse lower despite the fact traders remain net-short.
RELEVANT EUR/JPY DATA RELEASES
Economic Calendar– for the latest economic developments and upcoming event risk.
Comments
Log in or sign up to join the conversation.