The EUR/JPY pair fell during the session on Tuesday, just as the Euro looked weak in general. This pair has an obvious breakout point at the 131 handle, an area that we can't clear quite yet. However, I feel that it's only a matter of time before this market does breakout, and I would be very aggressively long of it when it does.
Looking at the chart, it's obvious that the lows are getting higher as time goes on, and as a result I believe that we could possibly be forming some type of ascending triangle, or perhaps a pennant, both suggesting that the market will go higher. However, with the way the Euro is been acting lately, I'm very hesitant to go along at this point.
Some of the old correlations don't seem to be holding up
Some of the old correlations don't seem to be holding up at the moment, and that in and of itself could be quite interesting. While the Dow Jones Industrial Average and the S&P 500 both have very strong looking chart, this particular pair has not followed. That's very interesting, considering that the market normally goes with the overall risk appetite of the markets in general, given it a reasonable correlation with stock markets in general.
With that being the case, I find it very interesting that the 131 handle is holding up as well as it is. This is more or less an anti-Euro signal as far as I can see, as the Yen certainly isn't going to be favored by many with the Bank of Japan willing to work so feverishly against it. Nonetheless, I couldn't see myself shorting this pair under any circumstance, and as a result I think that every time it falls, we should be looking for buying opportunities.
Going forward, I think that eventually the 131 level will get broken above, and the fact that the market is so strong going forward, I think that we will see a move towards the 135 handle at first, and perhaps even much higher levels.