Last week I mentioned a pending 300-pip opportunity on EURJPY.
The trend line support that extends from the August low at 124.90 appears to be the only thing propping up the risk-sensitive pair.
Given what I saw on other yen pairs including CADJPY at the time, a break lower seemed likely.
Today’s session has already pierced trend line support just above 127.90.
However, it may take a daily close below the level to confirm the breakdown.
By “daily close” I’m referring to the New York close at 5 pm EST. This is a special type of chart that is essential for trading price action.
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In my opinion, a break lower is imminent. It’s no coincidence that EURJPY is testing a key support level on the same day as USDJPY.
The USDJPY is the benchmark for the yen and risk appetite in general, at least when it comes to currencies.
Either pair could offer a favorable opportunity over the next 24 to 48 hours.
Given that the U.S. dollar has been much weaker than the euro, the USDJPY may be the better option.
Of course, that can change in a hurry.
As for the EURJPY, a daily close below this trend line (second chart) could open up the 2018 range floor at 125.00.
Keep in mind that tomorrow we have a Fed rate decision at 2 pm EST followed by a presser 30 minutes later.
There is also a BoJ rate decision and presser during early Thursday trade. As usual, they haven’t given us a specific time.
These events are likely to cause an increase in volatility for the EURJPY.
Personally, I think both USDJPY and EURJPY have the potential to become excellent opportunities.
But as always, I’ll wait for the daily close at 5 pm EST before acting.
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