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Today’s Trading Edge: EUR/JPY weakness resumes following bearish Gartley patternard Ratio is 1:4.

Posted by WorldWideMarkets . on Apr 3, 2016 8:18:45 PM

WWM_EURJPY_APR_3_2016.jpg

Early in Asia, the Japanese yen traded modestly lower against most of its major trading partners.   Over the weekend, the Yomiuri poll showed that the majority of Japan public supports a sales tax hike delay.  Also, approval ratings for Prime Minister Shinzo Abe’s cabinet rose 1% to 50%, while the disapproval rating fell a couple points to 38%. 

Other Japanese news saw the BoJ Tankan survey companies saw inflation now at 0.8%, lower than the prior 1.0% reading from the prior survey.  The 3-year inflation outlook survey was lowered to 1.3% from 1.3%.    

Price action on the EUR/JPY shows the bearish trend resumed on Thursday after forming a potential a bearish Gartley pattern.  The bearish reversal pattern targeted point D slightly ahead of the 61.8% Fibonacci retracement level of the X to A leg and the 141.4% Fibonacci expansion level of the B to C move.  Further downward pressure may target the 50-day SMA, which currently trades at the 126.78 level.  Deeper support could target the 124.75 level.  If we do not see a substantial reversal here, further upside may target the psychological 129.00 handle. 

The trade: Sell EUR/JPY 127.50 with a stop loss at 128.00 and a take profit at 125.50.  The Risk/Reward Ratio is 1:4. 

Topics: Abenomics, EUR/JPY, Japan, bank of japan, EURJPY

 

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