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The Japanese yen saw a big burst of buying just before the end of last week after the Bank of Japan monetary policy decision was announced.  With EUR/JPY already grinding lower ahead of the decision, the strong move lower is likely to draw in more sellers, especially if the pair continues to pull back into the confluence of Fibs, top WATR, and falling moving averages.

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

The stochastic indicator is also nearing overbought levels, so it is likely that the market may not even get there without fresh bullish news events.

  • WO: 133.08
  • Top WATR: 132.92
  • Bottom WATR: 130.55
  • PWH: 133.79
  • PWL: 131.04


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

Guppy is looking much like EUR/JPY above, driven lower by a strengthening Japanese yen.  There is one exception in that the stochastic indicator is still in oversold territory and has yet to turn higher.

So, the move lower may not be done just yet, but if there is a pullback to the top WATR and falling moving averages, we could start to see trend traders hop in once again to play the downtrend at a better price.

On the other side of the week open is the major psychological handle of 180.00, so if there is a move lower, it could be limited to that area unless global risk aversion sentiment stays strong or gets stronger.

  • WO:180.69
  • Top WATR: 182.26
  • Bottom WATR: 179.12
  • PWH:184.22
  • PWL: 180.69


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

EUR/GBP was rangebound once again, except tightening up the range a little bit more last week. This is creating a potential breakout setup and since we have higher “lows” and strong resistance at .7300, an upside breakout is a trade to look for this week.

Of course, gotta be aware of a pullback down to the moving averages as a potential long opportunity, as well as a downside breakout if this area doesn’t hold.

One thing to keep in mind that on the higher timeframes, this is a Fibonacci retracement area for the latest swing move lower, so if you’re trying to play the longer-term patterns, a downside breakout of the rising trendline may be the setup to watch out for.

  • WO: .7288
  • Top WATR: .7351
  • Bottom WATR: .7221
  • PWH: .7304
  • PWL: .7207

This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.