The EURJPY broke down from an exhaustion pattern during yesterday’s session. We discussed it in the private forums, and I know of a few members who caught the breakdown that occurred around 130.20.
For those who aren’t familiar with the upward sloping flag, it’s a pattern that signals exhaustion from buyers. The implications of the structure are similar to that of the rising wedge.
These patterns happen quite often in overextended markets. And given that the EURJPY was recently trading 400 pips above the mean on the weekly chart, there’s little doubt that buyers were starting to get stretched.
If you missed yesterday’s entry, there might be a second chance opportunity coming up. There is an ascending channel that extends back to July of last year. Buyers managed a close above resistance on June 27th, but recent yen strength could challenge the level momentarily.
Should we get a daily close (5 pm EST) below 127.00/30 over the coming sessions, it could offer another chance to get short.
Alternatively, bullish price action from 127.00/30 could provide a favorable opportunity to get long. But as I mentioned in yesterday’s GBPJPY commentary, the yen is picking up steam across the board. So until I see that theme change, I’ll continue to look for opportunities to buy the yen.
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