As we can see on the four hour chart, the pair is in a medium term uptrend, and after finding resistance around 138.00, EURJPY has retraced back to the rising trendline drawn on the chart. Stochastics are indicating that the current move lower may be oversold as the pair moves toward the 61% Fibonacci retracement area. Also, 132.00 is a psychologically significant round number - possibly an area of great interest in the short term.
Fundamentally, we have a few economic events to push currencies later today during the European trading session. Better than expected numbers may come out for the Euro-zone PMI and German PMI, and if it does we could see a short term boost to the beaten down euro and a bit of risk tolerance return to the market. We'll have to wait and see.
So, I am going to buy EURJPY mostly on technical reasons. My stop will be a wide 200 pips (the average daily range), and if the pair goes back higher we could see it move back to the week's opening price just above 134.00. Maybe even beyond. Here's what I am going to do:
Long EURJPY at 132.00, stop at 130.00, pt1 at 134.00, pt2 at 136.00
Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.
Good luck and stay tuned!
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