EUR/JPY Outlook (Week of March 5th)
by Himanshu Jain
EURJPY found an expected resistance just below the strong psychological level of 110.00 and went into sideways move.
We will keep a note of the following:
1) 110.00 represent a strong psychological resistance.
2) EURJPY was not able to break below the 5-day EMA support, continuously for 8 trading days but that support has been broken for past 4 trading days. The same point is true with the break of the support of Tenkan line of daily Ichimoku cloud.
Considering the above points we would expect some more downward consolidation. On the downside, a break below 107.19 i.e. the low of Feb 27th should take the currency pair towards 105.85/105.90. This zone represents the Fibonacci 38.2% retracement of the upward move during February 1st to 26th. Not only this but this is also the current support of the Kijun line of daily Ichimoku cloud and slightly below the current 22-day EMA.
The above mentioned correction will be considered as natural and will not be changing the focus towards downside. We would expect further upward move after some consolidation for a retest of the 110.00 psychological level, specifically 109.85. A decisive break of that should take EUR/JPY towards 111.20 to 111.60 resistance zone (end of October 2011).
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