Early in Asia, the Japanese yen traded modestly firmer against the majority of its major European trading partners. The euro rallied and yen declined after Emmanuel Macron and far-right populist Marine Le Pen came in first and second place in the first round of the France Presidential election. The two will debate on May 3rd and Presidential run-off will take place on May 7th. Risk on immediately followed the weekend election results as the daily polls appeared to have gotten this election right. Following the election, Macron has a comfortable 60% to 40% lead in most polls.
Price action on the EUR/JPY shows that the early April bearish move accelerated once price closed below the 200-day SMA. Price found support from both the psychological 115.00 handle and a bullish Gartley pattern. Point D was confirmed with both the 78.6% Fibonacci retracement level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move. Price surged to start the trading week, but quickly found resistance from the 100-day SMA, which currently trades at the 120.64 level. If we continues to see downside, key support may come from the 200-day SMA, which trades at the 117.90 level. If the rally resumes, key resistance will come from the 122.80 to 124.00 region.
The trade: Buy EUR/JPY 117.90 with a stop loss at 117.40 and a take profit at 119.40. The Risk/Reward Ratio is 1:3