The EUR/JPY pair initially tried to rally during the session on Friday, but turned back around almost immediately and then fell directly to the 140 level. That being the case, it appears that we are at a bit of a crossroads when it comes to this pair, as I see several reasons the think why the support should come into play and perhaps sends the market much higher.
The first thing that I would bring to your attention as the uptrend line that we are testing right now, which should continue to bring in the buyers, as the Japanese yen looks set to see a lot of selling pressure next week, as several uptrend lines are involved in the market at the moment. Because of this, I feel that this market could very well bounce from here, heading to the 142 level. That is where we fell from, and as a result I figure that’s probably the first target to the upside.
More support
I also see the 140 level as being very supportive based upon action over the last couple of months. That being the case, I also feel that the rest of the market participants will be aware of this as well, and as a result the first sign of support is a buying opportunities far as I can see. In fact, if we break down below the 139 handle, it appears that the market could fall apart at that point. However, I don’t think that is as likely as seeing a bounce from here, which simply would be a bit of consolidation and continuation will we’ve seen for the last 2 months.
However, I also believe that ultimately this market will test the 145 handle, but there will be areas that cause problems between here and there such as the 142 level, the 143 level, and then finally reaching the 145 handle. As far selling is concerned, if we did break down enough I think we would find plenty of support now at the 136 level if we do get below the aforementioned 139 handle.
