EUR/JPY Forecast December 19, 2012, Technical Analysis

The EUR/JPY pair rose during the session on Tuesday as the 110 level has been confirmed as support now. The hammer that was formed on Monday suggested that we would in fact see this move, and the buyers on Tuesday did not disappoint. In fact, we approach the 111.50 level with enough momentum that we believe it will be broken through some time soon.

The 111.50 level is relatively significant on the longer-term charts, so a sideways move in the meantime is very possible. However, 110 does in fact look like a bit of a floor in the market at this point in time. After all, we did have a gap form there, which is almost always a supportive sign. The fact that we fell and filled the gap with a hammer only reinforces that.

The European Union is getting a bit of a reprieve lately, and it does look like the Euro is being favored. After all, the Euro gained against pretty much everything out there during the Tuesday session, and as such it looks like we could continue much higher as this is one of the strongest currencies against one of the weakest ones which of course is exactly how you want to play the Forex markets to begin with.

Looking at this chart on the longer-term, I believe that we could easily at the 115 level in relatively short order. This could be especially true as the next couple of weeks are the most illiquid ones of the year. We could get a sudden move straight up under the right conditions as there will be hardly any sellers out there to counter the trade.

The closer we get to the holidays, the more likely we are to see a sudden and violent move like that. This pair is definitely broken out, there is no real debate on that, and we do think that this is a bit of a trend change and should see this as a buy-and-hold pair for the foreseeable future, and possibly most if not all of 2013.