EUR/JPY Trades Within A Flag Formation
JFD Team | Nov 13, 2020 07:13AM ET
EUR/JPY traded higher on Friday, after hitting support near the 123.80 level. Overall, the pair looks to be trading within a flag formation following the Monday’s surge on the positive news with regards to a potential coronavirus vaccine. As long as the pair is trading within the flag, we will stay neutral and wait for the exit. According to the theory, those patterns tend to be bullish, but we prefer to wait for the completion before we start examining whether another round of buying is possible.
We would like to see a strong move above the 124.66 barrier, marked by Wednesday’s high, before we start examining whether the bulls have gained the upper hand again. The rate will already be above the upper bound of the flag and thus, the bulls may decide to initially aim for Monday’s high, at around 125.12. Another break, above 125.12, could extend the advance towards the high of Sept. 15, at 125.75.
Shifting attention to our short-term oscillators, we see that the RSI runs slightly above 50, but points down, while the MACD, although positive, lies below its trigger line, pointing south as well. These indicators suggest that there is very little positive momentum, and thus, we would not be surprised if the pair continues to trade within the flag for a while more.
In order to start examining the bearish case, we would like to see a decisive dip below 123.40, marked by the low of Oct. 23. This may signal the downside exit out of the flag and may allow the bears to target the 123.10 zone, which is slightly below the peak of Nov. 5, and slightly above the high of Nov. 3. If the bears are still not willing to surrender, another move south could take the rate to Monday’s low, at around 122.72.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.