EUR/JPY Forecast October 17, 2014, Technical Analysis

The EUR/JPY pair fell during the session on Thursday, breaking below the 135 handle at one point during the day. However, we got a massive bounce later, forming a massive hammer. Because his hammer we believe that there are plenty of buyers underneath, as we closed above the 136 level, an impressive feat to say the least. With that being the case, the market looks as if it has a bit of a “floor” at the 135 handle, offering quite a bit of safety when it comes to bullish traders out there.

Remember, although the Euro has been beaten up rather significantly, the truth is that it appears this market is focusing more on the Japanese yen than the Euro, so having said that it makes sense that we continue to go higher. That being the case, we feel that buying on dips will continue to be the strategy that works best going forward, as the market should then head towards the 138 level next, and if we can break above there we could go as high as 140.

The markets prefer to sell off the Japanese yen in general, and with that being the case we feel that this will be an area that has a bit of a “knock on effect” from other yen related pairs, making it one that we certainly don’t want to sell because that is the same thing as saying that you want to buy the Yen.

The EUR/USD pair did in fact offer a bit of a hammer at the end of the day on Thursday, so that does suggest that the Euro will continue to attract buyers at least down in this low range, binds ultimately we believe that even if this market moves a little slower than other yen related markets, it should have the same general direction as most yen related pairs tend to move in lockstep at least as far as the direction is concerned. Any moves by the Bank of Japan to add more liquidity the marketplace will weaken the yen as well, and that of course will pushes pair up also.