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EURJPY Challenges 129.30 as New Resistance

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

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Two days ago I discussed a couple of options to capitalize on a EURJPY bearish outlook.

The first was to watch for a selling opportunity between 130.50 and 131.00 resistance. You’ll notice several highs in October at 130.50. At the same time, the 131.00 area has served as a key pivot for the pair since May.

The second option would materialize following a daily close (New York 5 pm EST) below the 129.30 support area. Given the way the pair was leaning on support this month, a break below 129.30 seemed likely.

Yesterday’s 128.47 close did just that. And as expected given the distance between yesterday’s close and the daily mean as represented by the 10 and 20 EMAs, EURJPY is currently challenging the area as new resistance.

As long as the pair remains below 129.30 on a daily closing basis, EURJPY will be vulnerable. Alternatively, a daily close back above 129.30 would suggest a move higher is in store for next week. It would also re-expose the 130.50 to 131.00 resistance area.

Being Friday, it would be prudent to wait until next week to make a decision here. The euro is also catching a bid today after retesting 1.1430 support (see Sunday’s EURUSD commentary), so shorting EURJPY now is a bit risky in my opinion.

If sellers can keep prices below 129.30 on a daily closing basis, the 127.00 support area will remain exposed for next week. We could also see a bid develop again in the 128.50 region.

Below those two levels we have the 2018 range low at 125.00. That seems to be the most logical target for those taking advantage of the 800 pip range I mentioned a couple of weeks ago.

Now is a good time to sit back and let the market make up its mind. And for those keeping track, as long as the S&P 500 remains under pressure, pairs like EURJPY and USDJPY (see yesterday’s commentary) may struggle to make meaningful gains.

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EURJPY daily time frame

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