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

The spot rate approaches the upper limit of its medium-term bearish channel at 122.50 suggesting a decline. However, a break of this level will initiate a violent bullish channel.
Technical indicators do not provide clear signals, but until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 122.50 with the 1st objective at 121.90 and then at 121.70. A breakthrough of 122.70 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 122.50 with the 1st objective at 123.10 and then at 123.30. A breakthrough of 122.30 will invalidate this scenario.