EURJPY has been observed ranging in a weekly basis, since September 17, with support at 131.40. A down channel ,has been identify however in the daily chart since the Tweezer Top formation on October 26 closing, in which the euro remained heavy in the wake of the ECB’s dovish guidance. The Daily weakness of Euro is in contrast with the intra day strength seen today.
The optimistic comments from the ECB and the European Commission on the growth outlook and dovish signals from Coeure, helped slightly Euro against Yen. The latest update of the Commission’s forecast puts Eurozone growth at 2.2% this year, up from 1.7% projected at the time of the last forecast in May. The Commission sees growth decelerating to 2.1% in 2018 and 1.9% in 2019.
Therefore with a hammer formation seen in the hourly chart and Stochastic sloping above 20, a short term Long Position was taken at 131.75. Targets were set at round level 132.00 and 132.20, with Support at 131.40.In general , the pair is weak in longer timeframes, hence a closing today below the Support level, suggests that Down channel is satisfied and weakness is likely to continue. Otherwise, only a break above the 20-Day MA, could provide signs that bearish movement is running out of steam, and pair could reverse upwards.
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