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The Euro was hammered during this past week not only against the US dollar, but also against the Japanese yen. The EURJPY pair traded as low as 135.80 recently, where the Euro buyers managed to hold the downside in the pair. The pair is consolidation as of writing and forming a breakout pattern in the short term. The market sentiment favours upside in the pair, as a short-term correction is due in the pair. The German trade balance data was published during the London session by the Statistisches Bundesamt Deutschland. The forecast was of a surplus of 16.8B euros. However, the outcome was on the positive side, as the German foreign trade balance recorded a surplus of 22.2 billion euros in July 2014.
There is a triangle forming on the 1 hour chart of the EURJPY pair, which is likely to act as a catalyst in the short term. The triangle resistance is around the 136.20 level. However, a major hurdle can be seen around the 23.6% fib retracement level of the last drop from the 138.27 high to 135.81 low. If the Euro buyers manage to settle above the mentioned area, then a move towards the 50% fib retracement level is possible at 137.04. The mentioned level could act as a monster resistance for the pair, as the 200 hourly moving average is sitting around the same levels. Moreover, the 100 hourly moving average is also sitting just above the 200 MA.
On the downside, support is around the last low. A break below the triangle support might ignite one more leg lower in the pair.
Overall, buying with a break above the triangle resistance is a good option as long as the pair is trading above the 135.80 area.
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Posted By IKOFX Technical Team: Online Forex Broker
Website: http://ikofx.com
