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The EUR/JPY pair initially rose during the Friday session, but fell back down to hover right at the 100 handle. Interestingly enough, the daily candle was a shooting star, and this was formed after two consecutive hammers. This suggests to us that there is going to be a bit of consolidation in this area as well as a tight range. We see support all the way down to the 99 handle, and as a result we think this is a natural place to see the markets try to make a bounce from.
Quite frankly, we are a bit surprised that this rally didn't "stick" as the breakout should have triggered a lot of buy orders. One of the contributing factors could have been the fact that this was a Friday session, and as a result many of the traders out there would not have wanted to keep positions on over the weekend. In a situation where we have so many potential headline risks out there, it would make sense that traders would be fairly skittish when it comes to holding the Euro over the weekend against a safe haven currency like the Japanese yen.
We think the support level below should be massive, and as a result we think eventually we will get an opportunity to go long of this market and aim for quite a bit target. In fact, the 100 handle was the site of a recent breakout and now that we have fallen back to it we need to see supportive action. So far, it has been.
Based upon the longer-term charts, we think that there is a real significant chance of seen this market move up to the 105 level. Above there, we see the 110 level as the next logical target. We don't know whether or not will get that high in this market, but the 105 level seems a very feasible at this point if we can get a little bit of traction.
As for selling this market, we have absolutely no interest in doing so until we close below 99 on a daily chart. At that point time, we think we would see a loss of momentum in a failure for the buyers to step in. We figure at that point time we would be heading towards the 95 handle.