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EURJPY Flirting with Key Support at 131.50

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EURJPY has been on our radar for several months now. The October 22nd breakout from the six-month wedge pattern gave a few of our members a favorable opportunity to get short.

Since that time the pair has drifted 200 pips lower without much urgency. Most of the hesitation has come over the last few weeks as the pair has found a bid at the 131.50 handle, a level that acted as resistance back in March.

While there isn’t much to do at the moment, a daily close below the eight-month level could trigger a resumption in selling pressure.

It’s no secret that I’ve been bearish on the Euro for quite some time. I still maintain the idea that the single currency could be well on its way to another multi-month (if not multi-year) decline.

While the EURUSD and EURJPY do have one obvious similarity, the latter poses a level of risk sensitivity that the former does not. With this in mind, any shift in risk sentiment could put the EURJPY ahead of its big brother in terms of downside potential.

My bearish bias will remain intact as long as the pair remains below the 133.30 handle on a closing basis. A close below 131.50 would expose the next support level near 128.70.

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EURJPY break of wedge support on the daily chart

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