The EUR/JPY pair fell hard during the session on Monday, but as you can see ran into a significant amount of support somewhere close to the 133 handle. This was the site of a significant breakout recently, so it does make sense that we would start to see some buying in this general vicinity. I still believe that this pair will continue higher, especially considering that the Bank of Japan is working against the value the Yen, and the Europeans have recently exited a recession, driving up demand for the Euro in general.
You should also keep in mind that the Federal Reserve has held off on tapering, and that has push the value of the dollar down. By extension, that pushes the value of the Euro up, and because of that there is a little bit of a knock on effect in this market. The length of the right candle course is somewhat disconcerting if you're bullish, but at the end of the day it really should be that big of a deal, simply because we are sitting right on an area that looks like a lot of support could come into play.
Looking for the bounce
I still believe that we will see a little bit of a bounce from here, and as a result we could see the market race back towards the 135 handle. That area of course will be a bit resistive, but in the end I think that we will eventually see the market go higher than that. I don't think that the markets will necessarily take off right away, and you can probably count on more of a grinder than a straight shot higher. This is mainly because the markets themselves are generally confused, which is the normal state of things in the last couple of years.
Keep in mind that this pair does tend to follow risk appetite overall, so we see strength in the stock markets around the world, this market should continue to go higher overall. In the end though, this is a "buy only" market for me.
