This candle does look rather bearish, but the fact that the area could stop it is cleanly as it did really has us wondering whether or not this wasn’t simple profit taking at the end of the week that was exacerbating the downdraft. Because of this, we feel that this market will get picked up somewhere in the general vicinity, and because of that we are more than willing to start buying the Euro, and start selling the Yen. Going forward, we fully expect this market to hit the 133 level again, not to mention the 135 level and beyond.

As far as selling is concerned, it’s almost an impossibility at this point in time. This is simply because the 130 level has several hammers just underneath it, which of course is almost always a sign of significant support. Below there, one 28 level looks to be supportive as well, as it is where the bottom of those hammers are sitting. With that in mind, we are buying this pair and if you are a bit aggressive, and you could even start buying right now.

However, the more conservative trader will want to see some type of supportive candle formed before they go ahead and start committing their trading capital. Either way is fine, as we think the market has certainly settled on the direction it once the go over the longer term. We fully expect see 135 hit over the next couple of months, and are plain this pair as such.

By FX Empire Analyst - Christopher Lewis:

The EUR/JPY pair rose during the previous week, breaking the top of the hammer from the week before. This suggests to us the market is about to go higher, and probably aim for 133 in the short term. We ultimately believe that this is a nice buy signal, and are perfectly comfortable buying it right here as far as selling is concerned, we will not do so because of the Bank of Japan, and look at any pullback as a potential buying opportunity as this market seems to have a long way to go still.

The EUR/JPY pair fell during the session on Friday, but as you can see bounced from the 131 handle. This hammer does suggest that we are going higher, and quite frankly looking at the weekly charts it’s hard to argue that point. With that being said, we expect a break of the top of this hammer to signal that we are going higher, and possibly to the 135 handle before it’s all said and done. Pullbacks should be thought of as buying opportunities, and we think that the 130 handle should offer significant support as well.

The EUR/JPY pair fell during the balance of the week, but as you can see the market bounced enough to form a hammer. It seems like this market is simply attracted to the 130 handle, so it doesn’t surprise us to see that the market is closed just below it. That being the case, we think that it’s only a matter of time before this market breaks out to the upside, and a move above the highs from this past week would be a valid buy signal after all. Because of this, we fully expect see this market grind higher, and feel that it’s only a matter of time before we reach for the 135 level.

The EUR/JPY pair went back and forth over the course of the last week, eventually closing just below the 130 handle. This candle is relatively neutral though, and as a result it suggests that the support that we have seen over the last couple of weeks should continue to keep this market going higher. Granted, the Euro itself is looking relatively weak, but the Yen continues get absolutely pummeled by almost everybody in the Forex markets now. That being the case, we think that this market will eventually grind its way up to the 133.50 level, and possibly quite higher.

The EUR/JPY pair fell initially during the session on Friday, but bounced off of the 128.50 level in order to form a hammer. Looking at this hammer, it sits just below the 130 level, and as a result it appears that the market is trying to breakout to the upside, so a move and daily close above the 130 level has buying again. In the meantime though, we think that this market will simply grind sideways, but it is still a market that we simply cannot sell though, simply because of the Bank of Japan and its work to devalue the Yen.

The EUR/JPY pair initially fell during the course of the week, but as you can see we bounced significantly in order to form a hammer. The hammer is just underneath the 130 handle, which if we can break above that, we think that this is a nice buy signal. There is a bit of resistance above, but we think eventually will be taken out, and as a result we think the longer-term trade is deftly to the upside in this market. Obviously with the Bank of Japan working against the value the Yen, we have no interest in selling this market.

The EUR/JPY pair rallied during the session on Friday, but found the 130 level still being far too resistant. If we can get above that level, this market really should continue much higher. However, it appears that the market is not quite ready to do so, as we may have a little bit of grinding to do from here.

However, on the longer-term charts it must be noted that the weekly candle is a hammer, even though it is sitting just below the 130 resistance level. This signifies to us that this market may continue to go higher fairly soon, but it may be more of a grind it vanished straight shot higher. If we can get above the 130 handle, we think that this market is a screaming buy, even though it will take a bit of persistence and fortitude in order to hang onto the trade in order to make it profitable.

As far as selling is concerned, we really aren’t that interested even though it appears that we could pull back slightly from here. It’s just far too risky of a move, as it is much easier to simply follow the larger time frames and notice that there are larger forces pushing the market around. Those forces should not be fought against, and as a result we think that this market is essentially a “one-way” trade.

We do see a lot of noise between 130 and 132, so of course if you do find yourself in a position where you are long of this market above that level, you have to understand that the move will take quite a bit of momentum to continue higher, and therefore it could be a rough ride. Alternately though, it seems like this market is destined to go much higher, especially look at the value of the Yen against the Dollar, and the fact of that market looks like it’s ready to continue higher as well. After all, these two markets do follow each other over the longer term as typically is all about the Yen, and not so much about the Dollar or the Euro.

The EUR/JPY pair attempted to break above the 130 handle again over the last week, but as you can see failed. The matter fact, on the daily chart we have two shooting stars in a row and this of course shows more weakness in them the weekly chart by itself shows. That being the case, we are simply going to wait and hope that this market pulled back to the 125 handle yen, which is an excellent place to start buying. If we get that move, we won’t hesitate on signs of support to start getting long.

Looking at the EUR/JPY pair, you can see that we have formed two shooting stars in a row now. This was preceded by a hammer, and therefore suggests to us that this market is going to grind sideways. It must be said though, to form two shooting stars in a row does look rather bearish. We think that we’ve got a consolidation area between the 130 handle on the top, and the 127 handle on the bottom. Because of this, we think that this market is a short-term trading environment, and therefore we want to sell towards the top of that range, and by towards the bottom.

The EUR/JPY pair fell hard after initially trying to rally during the week, in order to slam into the 125 handle. The 125 handle of course is very important, as it was significant resistance back in February and March, and now has been retested several times. All of the yen related pairs have been absolutely erratic, and quite frankly dangerous lately. This of course includes this pair, and as a result a lot of accounts probably got smoked this past week.

However, if there was ever an obvious place for support, the one 25 handle in this market is definitely it. The closing of the week towards the low of the range of course is a bit disconcerting, but quite frankly if we can get some type of supportive candle right around the 125 handle, we wouldn’t hesitate to start buying. It’s difficult to imagine that it will be based off of the weekly chart, so you may have to look towards the shorter-term charts such as the daily, or possibly even the four-hour chart in order to find that signal. Nonetheless, you can still use those shorter timeframe charts in order to find entry points on the longer-term trend.

If we managed to break down below the 125 handle, I would anticipate that the 120 handle would be almost impossible to overcome by the sellers. That is because there is so much noise between 125 and 120, they would take something extraordinarily bearish to happen in order for that was to occur. In fact, under the 120 handle the Bank of Japan would more than likely make its intentions known again by intervening.

Going forward, we fully expect to see this pair return to its bullish ways, but we have definitely stirred up a storm of volatility lately. For those that are patient enough to wait for the right signal, we believe that this market will continue higher, and that 135 handle will be targeted. As far as selling is concerned, we just cannot do it with the Bank of Japan out there waiting to intervene in case of a real meltdown.

The EUR/JPY pair fell hard during the session on Friday, but as you can see managed to stay above the 125 handle. The 125 handle is major support in this market, and as a result we feel that the market should continue to respect that level. On the other hand, the Bank of Japan is underneath there somewhere as well, and any significant move down from their will more than likely catch the central banks attention, and possibly its intervention. The entire market knows this, and as a result we believe that a bounce is coming again.