The EURJPY is getting a boost as the better US data spurs exit out of the JPY safe haven flows. The month high comes in at 97.80. The double high for the week has been breached at 97.45. This is now support. There are higher highs on the daily chart. The problem is the rally off the July low has not been able to get above the midpoint of the last major leg down at 97.855. That could be good for the bulls (there is room to roam). It could also be negative in that there is no hurry to buy.
Let’s be positive. Looking at the daily chart,
- The price is back above the January 2012 low at 97.01. Check
- The price is above the 38.2% of the last major leg down (from the June high) at 96.969. Check.
- The price broke above trend line support connecting highs. Check.
The next target to get above is the 97.80-85. On a break the 100 day MA will be the next key focus (downward sloping blue line in the chart above).
Where is the risk?
I have to think that if the bullish move is to continue to play out, that traders would love to see the price stay above the weeks old highs at the 97.45. A second line of support below would come in at the 97.235 level which is the 38.2% of the move up from yesterday’s low.
The JPY pairs have been beat down for so long. There are signs of recovery on hope for a recovery. There are signs for a recovery on technicals showing signs of turning. In order to keep the momentum going in what has been a trend the other way, steps forward must continue to be made (get above 97.80-85), and steps backward need to be avoided.