FX.co ★ EUR/JPY Intraday Technical Analysis

The spot rate bounced off yesterday at the intermediate support of its medium term bullish channel at 99.70 and is currently testing the upper limit of its short term bearish channel at 100.40 suggesting a decline. However, a break of these levels will release a good potential and enable the upper limit of its medium term channel at 101.30.

Technical indicators provide buy signals but approach an overbuy zone supporting the assumption of a decline. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement. 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 upper limit of its channel, we suggest 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell at the level of 100.40 with the 1st objective at 99.80 and then at 99.60. A breakthrough of 100.60 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means buying the spot rate as soon as it is broken through its resistance at 100.40 with the 1st objective at 101.00 and then at 101.30. A breakthrough of 100.20 will invalidate this scenario.