On January 23 I mentioned the idea that the EURJPY may have topped out at 136.60. The premise for the idea was based on a simple Fibonacci study that found similarities between key support areas and Fibonacci levels going back to the 2017 low.
Today that theory is under attack. As I type this, the EURJPY is trading just above 136.70 and is showing no sign of pulling back.
That said, I won’t conclude anything until the daily close at 5 pm EST. Furthermore, a 20 or 30 pip intraday move above the January 5 high isn’t quite enough to negate the idea I mentioned last week.
So what would negate it?
In my opinion, a daily close (New York 5 pm EST) above 136.63 would drastically reduce the odds that the area is a significant top.
But even if that occurs, EURJPY bulls aren’t out of the woods just yet. Rising wedge resistance comes in at 137.20/30, which is an area that’s sure to trigger an influx of selling pressure.
Perhaps the most prudent way to play this is to wait for a daily close at 5 pm EST below the trend line that extends from the August 2017 low. Until that happens, buyers are in control.
A close below that trend line would open the door to former range support at 131.40 followed by 128.30.
You could, of course, look for buying opportunities, just keep in mind that prices are getting stretched and overhead resistance is substantial.
There’s also a chance that the EURJPY will act similarly to the GBPJPY in recent weeks. I’m referring to the break above rising wedge resistance. If that happens here, I will not be a buyer.