EURJPY finds itself sandwhiched between key Fibonacci zones but, with the cross printing higher highs and lows, an upside break is favoured
Not surprisingly, due to the uncertainty surrounding Greece, there is a lot of confusion and whipsaws across some currency crosses. EURJPY is no exception as the daily candles overlap and ricochet between key levels. There is a good chance we may not see a breakout this week, assuming Greece take talks over the weekend and secure a last minute deal on Monday.
Back to the technical, I favour the upside break due to the bullish trend and trajectory (bullishness) it has displayed. The gains from the 126 lows are significantly more direct and bullish than the losses were from 136 - 126. Therefore I suspect we are within an impulsive move higher and now attempting to pick the end of the correction.
Support zone: 136.79-137.63
This houses the May high, 50% retracement between 133.1 low to 141 high, Monthly R1 and the low of yesterday's Bullish Hammer. The Hammer may provide a clue that we are nearing the end of a correction and for price to begin building up pressure above the low. However there is nothing magic about a single candle so be prepared for another dip into the support zone before lift-off.
Resistance: 140.70 - 141.850
Price action could in fact be forming a topping formation below here (such as a Double e/ Triple top) but a convincing break below the aforementioned support zone will be required to confirm it. Due to the bullish trend I suspect the support will hold, which mean we need to decide if we wait for a break above one of the prior two swing highs, or jump in early to attempt a bullish swing trade.
It should be remembered that, at any time, Euro crosses could find themselves on the unfriendly side of volatility. If Eurozone defaults for example, there is no rule book which says Euro has to go up or down. More likely it will see extreme volatility in both directions before a trend becomes established as we are in unchartered territory and participants are all equally confused or blissfully unaware of the ramifications. Therefor it would be beneficial to keep position sizes sensible, or wait for a decision to be made before committing.