The EURJPY is at risk of pulling back following what appears to be a break of support that extends from the April low. If we connect the July and September highs, it begins to look more like a rising wedge than anything else.
If the pair does lose ground from here, there’s one area I will be keeping a close eye on. The 128.40 handle played a critical role as support throughout July and August.
It’s also the ascending channel top that extends from the December 2016 high.
That intersection at 128.40 will be my target should we get a favorable short setup.
Keep in mind that non-farm payroll is out in just a few minutes at 8:30 am EST. As such, I’m going to wait for the dust to settle following the event before considering an entry.
I also want to wait until next week. Taking a position on a Friday carries more risk due to the chance of a weekend gap. Remember that Monday is also a U.S. holiday so trading activity may be lighter than usual.
An alternative approach to selling a retest of former wedge support is to wait for a daily close (5 pm EST) below Thursday’s low at 131.84. This area served as resistance in mid-September and later attracted bids on the 25th and 26th of last month.
Waiting for a daily close below 131.84 may be the ideal approach all things considered.
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