The EUR/JPY pair initially tried to rally during the day on Tuesday, but as you can see the 137.50 level offered a bit too much in the way resistance and turn the market back around. In fact, we found enough selling pressure to break to a fresh, new low and it appears that we are making a serious attempt to break down below the 136.50 level. This area will more than likely give way as I don’t really see massive support until we get down to the 135 handle, and that is now my target for this pair.
I have a lot of hope for the 138 level holding as support, but as you can see it has not. Now that we have cleared that area I think the sellers will control this market for the foreseeable future, and I recognize that this is in fact a Euro-based move as the USD/JPY isn’t falling apart, while the EUR/USD pair is. In other words, this is shorting the Euro, not buying the Yen.
Nice trend, no need to fight it.
Even though I don’t like the idea of buying the Japanese yen in general, I have to admit that the Euro looks rather sick at the moment. With that, I expect this market to continue to be one that you can sell every time rallies, and that is what I will do. I think that it is not until we clear the 138 level on a daily close at you can seriously consider buying this pair, and if we didn’t manage to do that it would be bullish enough to have me seriously considering holding onto the trade to the upside.
I don’t think that the 135 level gets broken to the downside though, simply because it was such a massive resistance barrier previously. Typically, areas like that will have massive amounts of buying orders that should keep the market somewhat afloat, and therefore once we get down there I would be more than willing to buy a supportive candle and treat it as a longer-term trade.
