By: Mike Kulej
In response to the Bank of Japan intervention in the Yen last week, all of the JPY pairs moved up sharply. The Euro-Yen reached almost 113.00, before settling into a sideways movement during the last few days. Clearly, the market is waiting for a new catalyst to spur the bigger price swing.
The EUR/JPY has been in a prolonged bear market, which has not turned around yet. However, the most recent price behavior suggests this pair could be trying to reverse. On the daily chart, in step with recent price advance, the MACD crossed above the zero, indicating a bullish momentum. The ADX, a trend strength indicator, also turned up giving some validity to this latest price surge as being a start to a possible reversal.
At the moment, it is still a correction. One of the steps in trend reversal is “taking out” the most recent major high. In this case, the EUR/JPY must get above 114.30, which is the high formed in July. If it is broken, chances for a major trend change in Euro-Yen will increase.
