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The EURJPY has been range-bound for the better part of two months.
As you can see, the pair has encountered buyers just below 121.00 while sellers have camped out near 123.30.
All of this has occurred following the breakdown I wrote about in early May.
Ranges like this can offer short-term trading opportunities. However, they can also present more substantial breakout opportunities.
In the case of EURJPY, I like the idea of shorting the pair following a daily close below range support at 120.90.
The reason for this is two-fold.
On the one hand, the EURJPY has been trending lower since February of last year. As such, I favor selling the pair until the trend changes.
And on the other, EURJPY appears to have failed to rally off of last week’s low. You can even see how Friday’s candle has engulfed the previous day’s range.
A close below range support next week would expose the 119 region. Keep in mind that area could be as low as 118.30.
Alternatively, a close above the range top at 123.30 would expose higher levels, including the May 3rd gap at 124.47.
That isn’t my base case scenario, though.
Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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