December 1, 2013 in Chart Alert
How can we not talk about EUR/JPY after we just talked about GBP/JPY. After all the story of EUR/JPY is also not much different even though differences are there. Do also check the update about GBP/JPY.
During September 2008, the pair has seen a volatility of 1295 pips. Yes, September 2008 was a month which had filed itself in the the history of global economy. After all Lehman Brothers bankruptcy had shaken down the economy for years to come. During the subsequent month EUR/JPY witnessed a volatility of 4607 pips. That kind of volatility is a record in itself. After that great fall the pair had remained in a very volatile sideways range for four months. The subsequent effort for the recovery had failed at 139.23 and then the 3 year long downtrend continued which went up to August 2012. Well, Why are we using the past tense? Has the downtrend already ended? Oops, questions are difficult but then let’s check what the charts are saying?
EUR/JPY monthly chart of past 10 years
The first indication for the possibilities of some significant upward gains or even a reversal had come in December 2012 when the price action had broken over the channel which was containing the price inside it for three years and three months. Well, it was something major but not as major as what happened during last week. EUR/JPY very bullishly broke over 139.23. Not only this level had proved to be a strong resistance after the great fall but this also represents the psychological resistance territory of 140.00 level. Last week the pair went as high as 139.71, just shy of 140.00.
What can we expect from EUR/JPY now?
Well, 140.00 can still try to exert its psychological pressure to bring some volatile sideways moves or even some consolidation. However, the momentum is not showing any slowdown and the pair should at least complete the 61.8% retracement of the fall from 169.98 to 94.12 by targeting 141.00.
The previous resistance is now expected to turn into support and hence if the support in the range of 139.23 holds then it will be an indication for the reversal. In such case a hit to 145.00 should come in handy.
If the support at 139.23 fails then further consolidation may take place towards 135.23 before another recovery effort. We stay bullish for EUR/JPY.
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