eurjpy daily chart
Markets

EUR/JPY: Lower-Highs as Prices Post Deeper Tests of LT Support

DailyFX.com -

Talking Points:

- EUR/JPY continues to test a longer-term support zone that's held the lows in the pair since last September.

- Bulls have been getting increasingly more bashful after each of those support tests, helping to produce a series of near-term lower-highs that go along with those deeper tests of support.

- If you're looking to improve your trading approach, check out our Traits of Successful Traders research. And if you'd like more of a basic primer for the FX market, check out our New to FX Guide .

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Longer-Term Support Still Holding, For Now

It was just last Friday that we looked at what was an aggressively bearish move down to a long-term area of support in EUR/JPY . This zone of support came into play in September of last year and has largely held the lows in the pair ever since. But after Friday's test, price action continued-lower this week to see yet another test within this zone on Wednesday; and after a reaction produced yet another lower-high, we're tilting back into this area again on Friday.

EUR/JPY Daily Chart: Deeper Test Within Longer-Term Support Zone

eurjpy daily chart

Chart prepared by James Stanley

Given the fact that this support zone has largely held up to this point - that should be a positive. But it's what has happened after that support came into play that begins complicating the bullish approach, and that's the fact that we've seen a series of lower-highs build in the pair as these support tests continue to get a bit deeper. On the hourly chart below, we can see sellers getting a bit more aggressive, unwilling to wait for stronger moves before taking on bearish exposure.

EUR/JPY Hourly Chart: Lower-Highs Accompany Deeper Tests of Longer-Term Support

eurjpy hourly chart

Chart prepared by James Stanley

Moving Forward

On Wednesday, we looked at the possibility of bearish plays using prior areas of resistance for short-term entries . Given that we're currently looking at a Friday ahead of a holiday-weekend in the United States, traders would likely want to be a bit more prudent with short-term strategies, particularly in markets that appear to be undergoing some state of change.

We're looking at two potential areas of lower-high resistance on the below chart, each of which can work with targets cast down to the current zone of longer-term support. If we do see a bearish break of this longer-term support zone before either of these resistance levels come into play, the pair can be revisited in the early-portion of next week to incorporate that new-found bearish momentum. But, until that area breaks, traders should remain on-guard as EUR/JPY carries the potential for a face-ripping rally, and stops should be set accordingly.

EUR/JPY Hourly Chart with Potential Areas of Short-Term Resistance

eurjpy hourly chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the Euro or Japanese Yen? Our DailyFX Forecasts for Q1 have a section for both EUR/USD and USD/JPY. We also offer a plethora of resources on our EUR/JPY page, and traders can stay up with near-term positioning via our IG Client Sentiment Indicator .

--- Written by James Stanley , Strategist for DailyFX.com

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Contact and follow James on Twitter: @JStanleyFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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