The EUR/JPY pair rose during the course of the session on Friday, slamming into the 130 level. This area offered a significant amount of resistance, pushing this market back down and making the candle form a shooting star. The shooting star of course is a very bearish sign, and it should push this market much lower. If we can break down below the bottom of the candle, I believe it is a sign to start selling yet again. If we do that, we should then head down to the 126 level as it is the most recent low that this market has made. Also, the Euro continues to struggle overall, and has formed a shooting star again some other currencies such as the British pound.
Any rally at this point in time is and quite a buying opportunity though, at least not until we get above the 132 level. That’s because there is a significant amount of resistance above and as a result I feel that this market cannot be bought at this point in time.
Bank of Japan versus the European Central Bank
The Bank of Japan continues to keep the market is very fluid, and as a result the Japanese yen continues to fall in value against most currencies. However, the Bank of Japan can do very little to lift this market because the European Central Bank has to be even more aggressive in its monetary policy, and the fact that the European Union continues to struggle with things like deflation and uncertainty will make the Euro even less desirable than the Yen.
I do think that we break down below the most recent low and perhaps head down to the 125 handle. It is a large, round, psychologically significant number, and the market will of course be attracted to it because of that. On the other hand, if we do somehow break out to the upside, I believe that the market will struggle to get above 135 before it’s all said and done.
