Strategy of the day on EUR/JPY
The spot rate approaches the upper limit of its medium-term bullish channel at 121.40 suggesting a decline. However, a break of these levels will initiate a more violent bullish channel.
Technical indicators do not provide clear signals and the rate evolves in overbuy zone, but until the resistance is not broken the assumption of a decline is most likely. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in the short term.
The spot rate approaches the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 121.40 with the 1st objective at 120.80 and then at 120.60. A breakthrough of 121.60 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 121.40 with the 1st objective at 122.00 and then at 122.20. A breakthrough of 121.20 will invalidate this scenario.
The material has been provided by Instaforex Company – http://www.instaforex.com/