Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.
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Following a rather aggressive selloff in October, EURJPY has bounced back this week. Last Friday’s bullish pin bar hinted at an upcoming surge higher, and that’s exactly what we got this week.
However, buyers are testing an area that could prove to be a roadblock for the relief rally. The 129.20/30 area is one I mentioned several times last month. You can see how this region attracted buyers during several sessions in mid-October.
129.20/30 is also the 38.2% Fibonacci retracement when measuring from the September high to the October low.
You can already see how EURJPY has come under pressure so far today. The pair is off today’s high by 50 pips so far which is a testament to the 129.20/30 resistance area.
Bearish price action from here could trigger a move lower next week. As you might have guessed, key support comes in at last week’s low of 126.70. Though I could also make a strong case for the 127.00 handle.
A daily close (New York 5 pm EST) below 126.70 would expose the multi-month range low at 125.00. Alternatively, a close above 129.30 would expose 130.90.