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 121.80 suggesting a decline. However, a break of these levels will allow it to reach the upper limit of its channel at 123.50.

Technical indicators provide sell signals and 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 increase these days. Stabilization is expected in a short term.

As the spot rate is currently testing the intermediate resistance of its channel, we recommend 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell on the level of 121.80 with the 1st objective at 121.20 and then at 121.00. A break through 122.00 will invalidate this scenario. The second scenario is a break of its resistance where we suggest a “buy stop” which means buying the spot rate as soon as it is broken through its resistance of 121.80 with the 1st objective at 122.40 and then at 122.60. A break through 121.60 will invalidate this scenario.