EUR/JPY: Bearish View
FBS | Jul 24, 2014 08:28AM ET
EUR/JPY - Trade idea: Sell from 136.10 with a stop at 137.60 and a target of 132.00.
Argumentation
As we see from the daily chart, EUR/JPY consolidates slightly above the bearish triangle support area (136.40/20). The Bank of Japan is still buying larger amounts of assets than the ECB does, but we expect the psychological effect from the new ECB measures and the BOJ reluctance to ease further to pull the cross down.
The medium-term technical picture remains bearish with an active dead cross on the daily Ichimoku. Break below the 136.10 mark will open the way to 132.00 and 131.00. These support levels could limit the decline. We would like to see a weekly close below 136.40 to confirm the bearish view. Apart from that, a break of USD/JPY could also confirm our bearish view on EUR/JPY.
Recovery above 137.60 would negate the near-term bearish view and open the way for a bounce into the 139.00-140.00 area (upper boarder of the triangle).
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