EUR/JPY is in the middle of a bullish run that is mirroring the rally that took place at the end of last year. Last October’s low of 134.13 pretty much saw an uninterrupted advance reach the 149.76, just shy of the 150.00 barrier. After almost rallying 1600 pips, EURJPY had a major selloff as fears of a Greek exit hit European markets. Now, the currency pair is rallying strongly from the April 14th low of 126.08. and has formed a bullish channel. The current advance is around 1440 pips.
After initially finding resistance from both the 140 handle and the upper boundary of the channel the recent rebound appears poised to make another attempt at breaking out higher. If bullishness can stabilize above 141.50, further upside may target the 142.82 level. If the noted resistance area is respected, we could see price pullback and target both the middle of the bullish channel trading range and the 200-day SMA at 137.11. If we do see a major selloff, major support will come from the 133.00 region.
The trade: Buy EUR/JPY 137.50 with a stop loss at 137.00 and a take profit at 139.50. The Risk/Reward Ratio is 1:4.
Edward J. Moya
Senior Market Strategist
WorldWideMarkets Online Trading