Following the ECB Press Conference and their decision to leave the interest rate unchanged at the history low level of 0.25%, EUR/JPY turned bearish after reaching 143.41 and failing to take out yesterday’s high.
Technical Analysis
The long term bullish trend is intact. Until yesterday it seemed EUR/JPY would continue higher within the current bullish channel, towards 145.50. Intraday action was concentrated around the resistance trendline, yet the daily bar failed to close above it. This scenario was played all over today with the same result.
As the pair failed for the third time to create a higher high, the triangle formation looks more genuine and EUR/JPY may be forced to retreat lower yet again. The pair is quickly approaching the tip of the triangle; the range will get smaller each day, so a major breakout is due very soon.
143.46 is the main resistance. 143.77, the high from March, is a close secondary resistance.
The support of the triangle formation is extremely well defined by the 50 and the 100-Day Moving Averages in the 140.60 region, followed by the 139.95-140.00 large round number support.
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Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets