The EUR/JPY pair rose during the session after initially falling on Monday, but remains below the 140 level. It’s at the 140 level that I see a significant amount of resistance, so we need to get above there in order to start buying again. If we do, I would not hesitate but do recognize the fact that the sellers will push this market back occasionally. The resistance will more than likely cause quite a bit of choppiness on the way higher, and I believe that the next major resistance area above the 140 level is probably at 143. There are minor ones between here and there though, so expect plenty of pullbacks.
If we can get above the 143 level, I see no reason why this market will go back to the 145 level. That area was pretty significant resistance last time, but quite frankly since we had recently bounced from the 61.8% Fibonacci retracement, I believe that we are in fact heading back towards the highs, and probably beyond that as we see this time and time again in the Forex markets.
Remember that this pair is extremely risk driven.
Remember that the EUR/JPY pair is highly correlated with global risk appetite. In order to get a tertiary indicator for this market, I tend to follow the Nikkei, DAX, and most of the larger indices around the world. Simply put, if the markets are all going higher, that means it risk appetite is fairly strong. Under normal circumstances, that will push this market higher.
As far as falling backwards, I don’t see a scenario in which I want to sell this pair quite yet. The Japanese yen has been beaten up for some time now, and the recent pullback in the value of the Euro has only offered an attractive buying opportunity of perceived value. Because of this, I feel that this market is ready to go higher, and I simply just need to see some type of daily close above the 140 level in order to pull the trigger. Pullbacks from here should produce supportive candles.
