EUR/JPY Technical Analysis: Preparing to Correct Higher?

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Talking Points:

• EUR/JPY Technical Strategy: Flat
• Support: 136.30, 135.60, 134.46
• Resistance: 137.25, 137.80, 138.69

The Euro may be preparing to launch a recovery against the Japanese Yen after prices produced a bullish Morning Star candlestick pattern. Near-term resistance is at 137.25, the 14.6% Fibonacci retracement, with a break above that on a daily closing basis exposing the 23.6% level at 137.80. Alternatively, a turn below the intersection of a falling channel floor and the 61.8% Fib expansion at 136.30 clears the way for a challenge of the 76.4% threshold at 135.60.

The ECB looks to be the most dovish of the leading central banks, putting the Euro at a disadvantage against its major counterparts. With that in mind, we will opt not to pursue a long position and wait for the bounce to produce a selling opportunity.

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Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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