It only felt like yesterday when the BoJ decided to inject 80 trillion yen into its economy. We saw the markets react with such volatility with the JPY weakening across the board. The EURJPY traded to the highs of 149.780 before tumbling down in the New Year due to the situation with the EUR. The pair had been trending to the downside quite well up until May 2015 in which we saw a range.
The JPY has been quite passive lately and such can be seen in the other JPY crosses. We had the USDJPY hovering below the 124.50 support, and the GBPJPY being driven solely by the strength or weakness of the GBP. The CADJPY has been trading lower, but this was simply because of the interest rate cut implemented by the BoC which ultimately weakened the Canadian dollar all around.
For a while with the JPY in the background the EURJPY was one which became technically flat but fundamentally sensitive to anything that happened with the EUR. On numerous occasions, the Sunday opens were heavily gapped to only be filled by the end of the next trading day. In spite of this some technical levels have come forward. With these levels, various trading possibilities may be discussed.
The weekly suggests that EURJPY is trading within three key points and have been since the start of May 2015. There are the 140.00 resistance, the 133.50 support and finally the pivotal 137.00 which has proved quite sticky in the weeks of June. Technical indicators do marry our thoughts on the market ranging. Price reside above the 20 SMA, but we are below the monthly pivot of 137.00. Not only is this a conflicting signal, the MACD is also flat. Last week’s candle did indeed close bearish, but a breach of the 133.50 support is needed for momentum to be regained with targets of 129.85. 129.85 currently stands as the monthly S2. This bearish view is only valid as long as prices keep below the 137.0 monthly support. A solid move back above 137.0 will open gates to 140.00
The daily timeframe also suggests that this is still a ranging market, but there is potential. As of now the EURJPY trades around the 135.6X regions which are bang in the centre of both the weekly pivot and daily 20 SMA. This is somewhat of an inflection point. Weak PMI releases earlier today helped bears, but one can see the relevant support intertwined at the weekly pivot/ daily S1. The range is still wide on the daily and it may be best to wait for this week to end before re-analysing things freshly in the new week.
Intraday – The EURJPY was initial flat intraday pre PMI release. As stated earlier this pair has become sensitive to any news in regards to the EUR. There was a near 60 pip decline which took prices just above the daily S1. Prices have been in a 20 pip range for the past few hours. An intraday breakdown below 135.50 may offer the signal needed for a further decline to 135.00. Things have been quite quiet though and prices may simply end the day within the 20 pip range created post-PMI release.
Trading exotics can be quite lucrative. An exotic is a term given to a currency which may be illiquid, lack popularity or even present some inconsistent market activities. On the flip side, exotics are known to have high levels of volatility and can trend very well over a long period of time. The major is normally the driving factor whilst the minor follows through.
The USDTRY is a perfect example of this. One can safely say the pair has been bullish on the monthly timeframe since 2008. We have consistently seen new highs printed and even the fundamentals compliment the technical on this particular exotic pair. Since prices had a monthly break and close above the 2.300 resistance back in December 2014, bulls have taken prices up over 4000 pips. Each month has consistently closed higher than the previous and the MACD firmly trading to the upside. The current relevant monthly levels are the 2.560 support of April 2015 and the light 2.700 resistance in May. Prices currently trade around 2.74X and a monthly close above the 2.700 resistance may suggest for a further incline to 2.875 which is the monthly R2. As stated previously the USDTRY is a pair driven by the USD and we can see how well the USD has been doing. The potential interest rate hike this year may give more strength to the USDTRY bulls.
The weekly timeframe for the USDTRY suggests a similar theme. The breakout above the 2.700 resistance on the weekly was a further sign that the short-term range had ended and bulls were ready to take prices higher. Interestingly after prices bounced from the weekly 20 SMA, strength was given to pierce through the 1 standard deviation of the Bollinger. A further indication that things are about to start trending once more. Even though the relevant key support on the monthly rests at 2.560, once prices attain the clean weekly close above the 2.700 the new lower high is transferred to 2.625.
On the daily we currently have a very strong bullish candlestick formation known as the 3 white soldiers. For most daily traders, the picture is clear. They may either wait for a healthy corrective move back to the monthly pivotal regions or simply a breakout above the 2.750 resistance of early June.
Intraday – USDTRY is bullish on the hourly timeframe. Prices ravaged through the daily R1 and found resistance at the 2.7500 level. The US session opens any minute now, but the intraday trend defining level remains at 2.72650. As long as we keep above here price may either correct to the 61.8% Fibonacci level of 2.7356 or simply breakout above 2.7500 with targets of 2.757.
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