• Last Candlesticks pattern: Window
• Time of formation: 24 April 2017
• Trend bias: Up
• Last Candlesticks pattern: Hammer
• Time of formation: 18 May 2017
• Trend bias: Up
EUR/JPY – 132.82
Although the single currency found support at 131.40 earlier this month and rebounded, as 133.89 capped euro’s upside and the pair has retreated, retaining our view that further consolidation below recent high of 134.50 (formed last month) would take place and mild downside bias remains for another retreat to 132.00, then test of said support at 131.40. Having said that, a daily close below latter level is needed to add credence to our view that top is possibly formed at 134.50, bring correction of recent upmove to 131.10, then test of the lower Kumo (now at 130.99), break there would provide confirmation, then subsequent fall to 130.40-50 would follow.
On the upside, whilst recovery to 133.40-45 cannot be ruled out, said resistance at 133.89 should cap upside and bring another retreat. Only a break of said resistance at 134.50 would abort and signal recent upmove has resumed for further gain to 135.00, however, overbought condition should limit upside to 136.00-10 and reckon 136.90-00 would hold from here, price should falter well below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), risk from there has increased for a much-needed correction to take place later.
Recommendation: Hold short entered at 133.70 for 131.70 with stop above 133.90.
On the weekly chart, euro’s rebound after finding support at 131.40 formed a doji star, suggesting consolidation would be seen, however, reckon upside would be limited to 133.89 resistance and last month’s high at 134.50 should remain intact, bring another retreat later, below said support at 131.40 would add credence to our view that a temporary top has possibly been formed at 134.50, bring retracement of recent rise to 130.90-00, then 130.20-25 but reckon downside would be limited to 129.37 support and previous support at 127.56 should remain intact.
On the upside, expect recovery to be limited to 133.40-50 and said resistance at 133.89 should hold, bring another retreat. Above said resistance at 134.50 would signal recent upmove from 109.49 (2016 low) has resumed and extend gain to 135.00, then 136.00-10, however, reckon upside would be limited and 136.95-00 should hold, price should fatter below 138.45-50 (1.618 times extension of 109.49-124.10 measuring from 114.85), bring retreat later.