Important: This site uses New York Close Forex Charts so that each 24-hour session starts and ends at 5 pm EST. These charts are essential for trading price action.
EURJPY has spent the second half of May consolidating above a key handle.
I wrote about the 122.65 support level in the May 19th weekly commentary.
It may not seem like much at first glance, but 122.65 is a significant zone for the risk-sensitive EURJPY.
Not only was it the January 3rd flash crash closing price, but it also served as a pivot for the pair between March and June of 2017.
Here’s a snapshot of that price action:
It’s little wonder why that January 3rd crash from this year managed to close at 122.65.
Fast forward to this month, and you can see where EURJPY has consolidated above this region since May 9th.
However, sellers cracked 122.65 on a daily closing basis on Thursday.
Notice how that May 23rd session printed the first sub 122.65 close since the pair tested the area as support on the 9th.
Friday’s session spiked above 122.65 intraday but failed to close back above it.
The same thing is happening so far today.
As long as 122.65 is intact as new resistance on a daily closing basis, I will continue to favor shorting EURJPY on strength.
Keep in mind that the May lows at 122.15 will likely continue to attract bids on any weakness.
But the trend remains in favor of shorts, and these sub 122.65 closes make this an uphill battle for buyers.
Key support from here comes in at 121.00 followed by the flash crash low near the 119.00 handle.
Alternatively, a daily close above 122.65 would negate the bearish outlook and re-expose 123.70.