FX.co ★ Strategy of the day on EUR/JPY

The spot rate is currently testing the intermediate resistance of its medium-term bearish channel at 123.70 suggesting a decline. However, a break of these levels will allow it to reach the upper limit of its channel at 125.70.

Technical indicators provide buy signals, but until the resistance is not broken, the assumption of a decline is most likely. Bollinger bands are much discarded as a result of a strong decline these days. Stabilization is expected in a short term.

The spot rate is currently testing the intermediate resistance of its channel, so we suggest 2 scenarios: the first one is the hypothesis of a decline, then we recommend a sell on the level of 123.70 with the 1st objective at 123.10 and then at 122.90. A break through 123.90 will invalidate this scenario. The second scenario is a break of its resistance, then we recommend a buy stop, which means to buy the spot rate as soon as it has broken through its resistance of 123.70 with the 1st objective at 124.40 and then at 124.60. A break through 123.50 will invalidate this scenario.