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The EUR/JPY pair fell during most of the session on Tuesday, but did manage to bounce in order to form a hammer off of the 98 handle. Although we see quite a bit of support at the 98 handle, it should be noted that there is quite a bit of resistance all the way to the 101 level. The 100 level will certainly be the epicenter of resistance, and as such we think that the next 200 pips or so will determine where this currency pair goes in the future.
We think that with the problems in Europe still being there, any signs of failure on a rally would be a sellable event. If we do manage to close above the 101 handle on a daily close, and then we are more than willing to go long as that would show a serious momentum shift in this pair. Conversely, a break of the lows from the Tuesday and Friday sessions would show a serious break of support, and have us aggressively selling this market.