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

The spot rate approaches the upper limit of its medium-term bearish channel at 125.00 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.

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.

The spot rate is currently testing the upper limit 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 125.00 with the 1st objective at 124.40 and then at 124.20. A break through 125.20 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 125.00 with the 1st objective at 125.60 and then at 125.80. A break through 124.80 will invalidate this scenario.