The EUR/JPY range is found between 136.75 – 133.45. The point at 136.75 is an important trend line, downsloping and was located at 136.90 yesterday. Shorts must hold this line. EUR/JPY Correlation Vs EUR/USD is found at 0.30 or 30 %. This is dismal. The Correlation reached its highs Vs EUR/USD 5 weeks ago and has been dropping ever since. Last week the Correlation hit its lows at 0.10 or 10%. If we are truly in risk off markets then EUR/JPY must lose its connection fully to EUR/USD and switch to USD/JPY. At 0.30, we are very close but also it explains why EUR/JPY has meandered without direction for many weeks. This means EUR/USD is vulnerable to further downside and EUR/JPY will rise along with its new friend USD/JPY. But the full and formal break must occur then EUR/JPY will embark on a massive upward trend as its price is very overold and not near overbought in long, medium, short or intraday terms. The opposite is USD/JPY is also very oversold and can easily handle higher prices.
The big breaks below are found at 132.52 and 130.82. Both provided massive support over the past year as EUR/JPY dropped from its 144 highs. Above, EUR/JPY must break 139.83 to trend and head higher. 139.83 is not a fixed trend line, its a slow mover but its the guide moving forward. All other points offered are Support / Reiistance points that will hold for the next week.
Below the big line point at 136.75, next targets 136.70, 136.58, 136.38, 136.11. Above 136.75, next targets 136.79, 137.03, 138.92.
The NFP trade. Extreme sell point found 137.27, Long at 136.34.
Brian Twomey, Inside the Currency Market, btwomey.com