This week our consideration will be focused on the ECB meeting on monetary policy in order to learn about the future direction for the Euro as a single currency versus all other currencies, as well as on the comments on last week’s performance for the European currency.
In this article we will take a look at the Euro against the Japanese Yen. The pair rose by more than 1100 pips in a month to record its highest level in one year at 125.82. It has been trading within just 300 pips for a month; the pair is trading inside a symmetric triangle pattern. The EUR/JPY went back around from the lower limit after we noticed the divergence between the bottoms in the chart and the MACD indicator to trade now at 124.45 and has a support level 20 pips further down. We have to wait for the breakthrough or bounce back, but the SMA is above the prices which support the breaking idea and the MACD is giving us the sell signal too.
So, we have two scenarios:
Scenario #1: The pair will break the support level and go ahead to 123.30, then 121.73 after breaking the triangle if we hear negative comments from the ECB press conference.
Scenario #2: If the pair rises again and breaks the triangle upward we can take buy positions and place our target at 127.80.
Still, as of now the first scenario is more likely, so we can sell the pair now at 124.50 and use 123.30 and 121.73 as our targets. We have to close the sell positions if we see a bullish price action candle at the support level 124.25.
This week we have much hot news from Europe like the UK’s Parliamentary Elections and the minimum bid rate from the ECB, so we have to be careful in trading this week.
