EURJPY is trading higher from the last couple of weeks, and I think any pullback can present us a buy opportunity. There are two major trend lines on the 4 hour chart as plotted below, which may act as a support for the pair in short to medium term. There is also a bullish hidden divergence on the 4 hour chart, which adds value to my bullish view.
There is a small wedge forming on the 1 hour chart as shown below. Now, there can be two ways to trade EURJPY. First, if the pair drops further around the 4 hour trend line, makes a stop, then after the bullish divergence on the 4 hour chart it creates a bullish candle pattern on the 1 hour chart, then will we jump into a buy trade. Alternatively, if the pair pushes to the upside, and breaks the wedge and resistance at around 133.10, then we can also enter a buy trade for EURJPY.
Initial target can be around 134.10 and final target could be all the way to the last high. Stop should be placed below the trend line for the first case and below last low for the second case.
Reviewing yesterday’s events and trades
Yesterday, US dollar gained a little against all major currencies as the risk aversion mood was observed in the market. German IFO business climate index was released yesterday, and measured less than expected, which was one of the reasons of EURUSD slide. Canadian retails sales for August also came less than expected with a gain of 0.6%. CB consumer confidence from the US too declined to 79.7 from the previous of 81.8. Overall market was mixed with the disappointing data from everywhere. NZDUSD and AUDUSD moved down early in the Asian session after the disappointing trade balance data.
Fundamental Outlook for the day
Today, US session would be very interesting as we have two major fundamental events lined up, including Core durable goods orders and new home sales data. US Core durable goods orders is expected to gain 1.0% and New home sales figure is also expected to rise around 420K. If data does not disappoint, then we may further see some US dollar strength going forward in the week. Major currencies like EURUSD, GBPUSD and AUDUSD are trading near critical support levels, and any surprising data may cause further slide.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: EURUSD, EURNZD, GBPUSD, NZDJPY, DOW JONES and AUDCAD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
