EUR/JPY: Continuation or Correction- Range Break to Offer Opportunity

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Talking Points

EUR/JPY Daily Timeframe

EUR/JPY Daily Chart

Technical Outlook: EUR/JPY has continued to trade within a cramped of this extended descending pitchfork arrangement fluctuating off a Jul 2016 lows. The span is consolidating within a initial monthly opening operation after encountering connection insurgency progressing this month during 130.69. Near-term support rests with a monthly open during 127.96 and a concentration is on a mangle of this operation streamer into a tighten of Jul trade.

A topside crack targets a shifting together fluctuating off a Dec highs that converges on a 2016 high during 132.29, corroborated by a 61.8% retracement during 134.29. A mangle next highlighted slope support risks a incomparable scale improvement in a span with such a unfolding targeting a 127-handle corroborated by 125.67 a median-line / 38.2% retracement during 124.69(broader bullish invalidation).

Learn some-more about Pitchfork formations in Michael’s three-part trade series

EUR/JPY 120min Timeframe

EUR/JPY 120min Chart

Notes: A closer demeanour during cost movement highlights a converging seen given a monthly open. Interim insurgency stands during 129.75 corroborated by simple trendline resistance, now ~130.40s. Immediate support rests during 128.89. From a trade standpoint, I’ll preference offered rallies while within this operation though eventually we’ll be looking for a incomparable pullback to offer some-more auspicious long-entries. Added counsel is fitting streamer into acceleration releases from Japan and Germany this week with a events expected to fuel increasing sensitivity in their particular crosses.

EUR/JPY: Continuation or Correction- Range Break to Offer OpportunityEUR/JPY: Continuation or Correction- Range Break to Offer Opportunity

EUR/JPY IG Client Sentiment

  • A outline of IG Client Sentimentshows traders are net-short EUR/JPY- a ratio stands during -2.33–bullish reading
  • Retail has been net-short given Apr 25- Price has changed 11.3% aloft since
  • Long positions are 9.6% reduce than yesterday though 4.9% higher from final week
  • Short positions are 10.1% higher than yesterday and 19.9% reduce from final week
  • We typically take a contrarian perspective to throng sentiment, and a fact traders are net-short suggests EUR/JPY prices might continue to rise. That said, positioning is more net-short than yesterday though reduction net-short from final week and the multiple of stream view and new changes gives us a serve churned near-term trading bias.
  • Bottom line: Sentiment is entrance off extremes and highlights a near-term risk to this advance. Ultimately, we would be looking to blur a pullback in a span targeting a crack of a 2016 highs.

What to demeanour for in EUR/JPY retail positioning – Click here to learn more about sentiment!

Relevant Data Releases

EUR/JPY Economic Docket

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– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or hit him during mboutros@dailyfx.com.

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