14 Oct 2014
EUR/JPY: Vigorous bounce above 136.00 after bear trap
FXStreet (Bali) - EUR/JPY is building up on Monday's gains along early Asian hours, with the exchange rate presently exchanging hands at weekly highs 136.36, having recovered off 135.50/55 lows.
The latest spike in EUR/USD, which failed to see a move of the same proportions in USD/JPY sales, has allowed EUR/JPY to run an impressive recovery, closing at day highs in US holidays. Note, the pair has found strong buying despite sour mood in the SP500 futures, in what appears to have been a classic EUR/JPY bear trap, after the break of a double bottom through Aug/Sept lows, induced new shorts, only for the pair to find a fresh army of buyers at a key parallel support 135.50, squeezing them back up.
Valeria Bednarik, Chief Analyst at FXStreet, notes: "The pair has established itself above 136.00, but has been unable to post any upward momentum afterwards, and the 1 hour chart shows indicators now turning lower and approaching their midlines, while 100 and 200 SMAs maintain a clear bearish tone well above current price. In the 4 hours chart technical settings also support the downside, as indicators turn south well into negative territory after barely correcting oversold readings. Critical resistance stands now in the 136.40/50 price zone, as only above it the pair will be able to continue advancing, approaching then 137.00 price zone."
The latest spike in EUR/USD, which failed to see a move of the same proportions in USD/JPY sales, has allowed EUR/JPY to run an impressive recovery, closing at day highs in US holidays. Note, the pair has found strong buying despite sour mood in the SP500 futures, in what appears to have been a classic EUR/JPY bear trap, after the break of a double bottom through Aug/Sept lows, induced new shorts, only for the pair to find a fresh army of buyers at a key parallel support 135.50, squeezing them back up.
Valeria Bednarik, Chief Analyst at FXStreet, notes: "The pair has established itself above 136.00, but has been unable to post any upward momentum afterwards, and the 1 hour chart shows indicators now turning lower and approaching their midlines, while 100 and 200 SMAs maintain a clear bearish tone well above current price. In the 4 hours chart technical settings also support the downside, as indicators turn south well into negative territory after barely correcting oversold readings. Critical resistance stands now in the 136.40/50 price zone, as only above it the pair will be able to continue advancing, approaching then 137.00 price zone."