EUR/JPY Forecast November 26, 2015, Technical Analysis

The EUR/JPY pair initially broke down below the 130 level during the day on Wednesday, which has been a very significant support level as far as we could see. The fact that we broke down below there is a negative sign but we also sell buyers come into this market and push it back above that level to form a hammer. With this, we believe that we will more than likely get a bounce from here, and a break above the top of the hammer should send this market looking for resistance above. We see resistance at the 1.32 level, and most certainly the 1.33 handle.

Ultimately, we believe that the easiest trade will be to simply sell rallies on signs of exhaustion. Exhaustive candles of course will give us an opportunity to take advantage of value in the Japanese yen, but ultimately the one thing that we need to pay attention to is the fact that the Euro is so soft in general. The Euro looks a bit oversold at the moment in general, so the fact that this market broke down and pressed the support below isn’t much of a surprise at the moment. However, a bounce is also not a surprise either but I think this is only going to be a short-term opportunity for buyers at best.

It is not until we break above the 133 level that we would even remotely consider buying this pair, as it is so bearish, and the Euro itself has far too many issues in general. The Japanese yen isn’t a currency that we wish to own overall, but in this case – we could consider it.

The breaking below 130 is a major move in our opinion, and should see this pair going to the 125 level next. We think that selling will be the theme going forward overall, and there will be plenty of problems coming out of the European Union to put pressure on not only this pair, but most EUR-related pairs in general. As long as EU problems continue, this pair will struggle.