EUR/JPY Turn-Around Eyes 138
Technical Sentiment: Bullish
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- EUR/JPY bounced off 61.8% Fibonacci line at 135.22;
- Bullish Engulfing Bar signals strong intentions for future gains;
- 4H 200-Simple Moving Average eyed next;
On Thursday the Euro managed to completely turn the tables against a weakening Yen. EUR/JPY shows multiple bullish technical signals, all pointing to future gains toward 138 and possibly even 139.15.
EUR/JPY rally began in the early hours of the European session; when Euro sentiment received a boost as Spanish Unemployment Rate unexpectedly dropped to 23.7% while German and Euro-zone PMIs finally showed signs of stabilizing.
Late last week EUR/JPY showed the first reversal signs following its 700 pip sell-off down from 141 to 134. A large bullish Pin bar led buyers above the resistance trendline, also invalidating the Lower Highs swing structure. Unfortunately this rally was short-lived, with EUR/JPY falling back as market participants appeared reluctant of the newly found direction.
Today’s rally confirms a bullish perspective, since a higher Low was formed on the 61.8% Fibonacci retracement level based on last week’s upswing. Price action is showing a large Bullish Engulfing bar as EUR/JPY is currently trading around 136.88. The 20th October high at 137.00 was briefly tested during the U.S. session. A rally above this level will constitute a fresh buy signal, prompting buyers to target the 200-SMA line at 137.73 and the large pivot zone at 138.00. A secondary upside target resides at 139.15, where the 200-Day Moving Average will likely cap any rallies on their first attempt.
This newly formed bullish scenario is likely to remain valid as long EUR/JPY maintains a Higher High/Higher Low configuration above 135.22.