The EURJPY is in the process of testing the 131.35 handle. We looked at this level on Sunday before the market opened and while the pair was still trading at 130.18.
Monday’s candle that engulfed the previous two days was a signal that the 131.35 area was likely to come under fire as new resistance. Even yesterday’s close at session highs was an indication that buyers wanted to push prices higher.
Despite the intraday surge to 132.00, today’s price action is ideal for the price action trader. After all, if you want to know whether or not a level will hold as new resistance, what better way than to see price trading 65 pips above it on an intraday basis?
Now, if you’re an end of day trader like me, you know the importance of waiting for today’s close at 5 pm EST. Remember, a New York close chart gives you the best chance of succeeding when trading price action.
If the EURJPY closes today below 131.35, I will consider opening a small short position. Key support below 131.35 comes in at 128.30 with a minor area at last week’s low of 129.35.
Alternatively, if the EURJPY closes the day above 131.35, I will stand aside and wait for bearish price action at higher levels. Those levels include 133.00 as well as 134.30.
Keep in mind that we have the BOJ rate decision and statement early in Friday’s session. Then at 8:30 am EST we have non-farm payrolls, which will no doubt trigger some additional volatility.