The EUR/JPY pair fell during the bulk of the session on Monday, but bounced hard enough off of the 141 level in order to form a hammer. This hammer signifies what I have suspected all along, that the uptrend is about to continue in this pair. The real question of course is going to be whether or not the trend can continue now, or if it will have to wait until after the New Year holiday.
That being the case, I’m still optimistic as to the uptrend of this pair, and am willing to buy on a break of the top of hammer. I also recognize the fact that we may not see this market really do much between now and the end of the year, but quite frankly I certainly do not see the ability to sell this pair. It’s just too bullish.
Remember, the EUR/JPY pair is highly sensitive to risk appetite.
The EUR/JPY pair is highly sensitive to risk appetite, and therefore you have to keep an eye on global stock markets. Of particular interest are the Nikkei, and the S&P 500. As these two markets go, so typically goes this currency pair.
All things being equal, I think that there is a significant amount of support at the 139 handle as well, so therefore I think even if we can break down below the 141 level, this pair will attract enough buying to keep the uptrend fairly buoyant. To the outside, I still believe that this market is going to target the 145 handle, and probably much higher than that during 2014. However, again I would say that the end of the year may keep a little bit of a lid on this market, but in the end if you are patient enough you should be rewarded for your long positions.
All things being equal, I would not only be buying on dips, but would be adding to positions going forward every time this pair dips. The Bank of Japan has just recently started its monetary weakening, and therefore I think the Yen will continue to depreciating as most currencies.
