FX.co ★ EUR/JPY Intraday Technical Analysis

Since yesterday the spot rate is testing the intermediate resistance of its medium term bullish channel at 97.60 and seems to decline. A break of these levels would allow it to reach the upper limit of its channel at 98.90. However, a decline would enable reaching the lower limit of its channel 96.30.
Technical indicators provide sell signals and until the resistance is not broken, the hypothesis 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. Furthermore, superior band strengthens the intermediate resistance supporting the assumption of a violent movement in case of break.
The spot rate tests its resistance that is why we recommend 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell on the level of 97.60 with the 1st objective at 97.00 and then at 96.80. A breakthrough 97.80 will invalidate this scenario. The second scenario is the hypothesis of a break of its resistance, and here we recommend a “buy stop”. We suggest to buy the spot rate as soon as it is broken through its resistance of 97.60 with the 1st objective at 98.20 and then at 98.40. A breakthrough 97.40 will invalidate this scenario.