Welcome to mid-week trading, yo!
Ya plannin’ on trading either of these setups?
After falling by 240 pips in ten days back in early January, EUR/JPY is taking a breather inside what looks like a rising wedge pattern.If you’ve read your School of Pipsology, then you’ll know that rising wedges are usually bearish in nature. What’s more, breakouts tend to be as strong as the height of the base of the triangle. We’re talking 100 pips in this case!
Not into patterns schmatterns? That’s fine, you can take your cues from the 1-hour bearish divergence instead.
EUR/JPY doesn’t look ready for a breakout just yet, though, so y’all still have time to make your trading plans.
A downside break could drag the euro back to the 125.00 major psychological handle. Meanwhile, a pop above the current consolidation could lead to retests of the 126.70 or 127.20 previous inflection points.
A few days ago, we talked about EUR/AUD possibly forming a double bottom on the 4-hour time frame.
But now that the pair has decided to chill just below the 100 SMA, then maybe we can trade its consolidation instead.See, the pair is sitting on the 1.5725 zone that lines up with a mid-range support. It also doesn’t hurt that Stochastic is already flashing an oversold signal.
Euro bulls can buy at current levels and aim for the 1.5800 range resistance. You can also brace for an upside breakout in case traders manage to raise EUR/JPY firmly above the 100 SMA and inspire a longer-term reversal.
The bears, on the other hand, can wait for EUR/JPY to trade below the mid-range levels and maybe even go back below the broken trend line resistance in case the pair dips back to 1.5600.
Watch this one closely, will ya?