We are waiting for the pair to break the support level 131.80 to take sell positions.

For more than a month the EUR/JPY has been trading in a narrow area above 131.80 and below 134.40. Our last report about the pair was on September 25 and we recommended selling it around 133.12. The pair hit our target at 132.35 and we didn’t enter the market again because the pair was still above the support area.

It’s the sixth time the pair has tried to break the support level 131.80 after breaking the channel and retesting it. In the beginning of this month the sellers broke the short-term trendline and retested it successfully on October 11 and declined 150 pips since this date. The price has stopped now at the support area because sellers don’t have the power now to break it. However, we expect that will happen soon, especially because the pair broke the moving average for the last 50 days so we will be ready for the breaking to seize this chance to make profits.

The Next Few Days

Based on this analysis we will sell the pair immediately after seeing a daily close below 131.80 and keep our first take profit level at 129.50, with a second one at 128.00, placing our stop loss level above the last top at 133.50. Alternatively, if the pair breaks the last top it would mean that the bullish wave is still alive and we will look forward to a new high.

This week the markets don’t offer much news from the European Union or Japan, except for Draghi’s speech tomorrow in Frankfurt at the ECB conference.