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EUR/JPY‘s volatility increased once again, but it wasn’t until the end of the week that we saw a big burst of volatility.  This downside move created a support break scenario that could be interesting if we saw the market pullback higher this week.

EUR/JPY 1-Hour Forex Chart
EUR/JPY 1-Hour Forex Chart

Since the market seems to be in a short-term downtrend, a pullback higher to the 134.00 – 135.00 area is likely to draw in sellers who not only like to play psychological levels but also the weekly average true ranges.  And by the time the market gets up there (if it does), we’ll see the moving averages cross into that area, potentially drawing in more sellers.

  • WO: 132.73
  • Top WATR: 134.17
  • Bottom WATR: 131.30
  • PWH: 136.36
  • PWL: 132.23


GBP/JPY 1-Hour Forex Chart
GBP/JPY 1-Hour Forex Chart

GBP/JPY has also been getting beat up to the downside, mostly on broad risk aversion flows that benefit the Japanese yen. With volatility levels on the rise (which is great for forex traders), that top weekly ATR level can be easily blown away on a pullback, but that’s where I’d start paying attention for bearish candlestick patterns to form before playing the solid downtrend we’re seeing at the moment.

A retest of the 185.00 major psychological level would definitely get some orders from me to play the broad yen strength against the British pound.

  • WO: 180.49
  • Top WATR: 182.54
  • Bottom WATR: 178.45
  • PWH: 187.63
  • PWL: 180.50


EUR/GBP 1-Hour Forex Chart
EUR/GBP 1-Hour Forex Chart

The picture has changed in the last couple of weeks for EUR/GBP, which now seems to be in rangebound mode over the last couple of weeks. The short-term trend is to the upside, so a retest of the bottom of the recent range for a long play is how I usually like to go, but if we get a big catalyst from the forex calendar this week, I’ve got to be ready for a breakout trade in either side of the consolidation (especially an upside break of the PWH).

  • WO: .7252
  • Top WATR: .7332
  • Bottom WATR: .7173
  • PWH: .7422
  • PWL: .7247

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