EUR/JPY Forecast February 24, 2016, Technical Analysis

The EUR/JPY pair fell significantly during the course of the session on Tuesday, and it looks as if we are going to continue to go lower. In fact, we believe that the market should try to reach down to the 120 handle. At this point, if we rally from here, we would anticipate seeing the 125 level as resistance. A resistive candle above there would be reason enough to sell as well, so having said that this is a market that we should see fall from here. We have no interest whatsoever in buying, at least not until we get above the 125.50 level, something that’s going to be very difficult to do at the moment.
Remember that we broke down below the 125 level just a couple of sessions ago, which is a very negative sign. That was an area that had been so reliable as support previously, so now that we have broken down below there it looks as if we will continue to go much lower. That massive support should now be massively resistive, so we would more than likely see some type of exhaustive candle. On the other hand, we broke above there it would show a complete momentum swing, which of course would be a very strong signal.
Keep in mind that the EUR/JPY pair is extraordinarily sensitive to risk appetite, and as a general rule this pair will follow whatever goes on with global stock markets as the market tends to follow the Nikkei, the DAX, CAC, and American stock markets in general. As most of these markets will move in the same general direction during most days, they can be used as a barometer as to where this pair should go.
The fact that this market fell even lower during the day on Tuesday shows that there is plenty of bearish pressure out there, and that it’s only a matter of time before the market reaches towards the next major level, the 120 handle as it will certainly be one level that should be very attractive to sellers.