EUR/JPY maintains its bullish breakout since the double-bottom pattern formed on September 5th. In the process, price has made a new four-month high at 140.20.
Although recent weakness has plagued the euro, significant downside remains firmly in place for the Japanese yen. If EUR/JPY can stay above both the 140 handle and the 200-day SMA by the end of the week, we may see further upside eventually target the next major resistance level at 142.
The 138.50 level will remain critical support and if price does recapture that area, we could see further consolidation target 137.37, which is also currently where the 50-day SMA is trading. The longer-term range that may remain in place for the next 6 months is currently 136-145. If the bullish rally continues and makes highs above our range, major resistance rests at the 148 handle.
The trade: Buy EUR/JPY 139.72 with a stop loss at 139.22 and a take profit at 140.72. The Risk/Reward Ratio is 1:2.
Edward J. Moya
WorldWideMarkets Online Trading