EUR/JPY explores risky highs
By Kira Iukhtenko, FX BAZOOKA
There is curious picture on the daily EUR/JPY chart. On Wednesday the pair has formed a strong bearish engulfing candle with a daily close at 134.10. However, on Thursday the candle was engulfed by a larger 200-pips bullish engulfing candle. As a result, EUR broke above the 2013 resistance line (135.50) and hit a fresh 4-year high of 136.50.
We expect a bearish correction from here. The pair rose to the critically high levels, there is also a bunch of MACD divergences on the different timeframes. On a monthly chart EUR is trying to break out of the wide bearish Ichimoku - there is a high chance that the first attempt won't be sucessful (around 136.00). However, the losses are very likely to be limited by the132.00 mark (support of a rising 2013 channel).
In the medium term we target the 138.00 mark. Be ready to buy the pair on dips.
Chart. Daily EUR/JPY