EUR/JPY Forecast July 14, 2016, Technical Analysis

The EUR/JPY pair initially tried to fall during the course of the day on Wednesday, but found the 150 level to be supportive enough to turn the market back around and form a hammer. If we can break above the top of the range for the day, I feel that the market should continue to go higher, perhaps reaching towards the 120 level given enough time. After all, the Bank of Japan is somewhat threatening at this point in time to get involved in the currency markets as the Japanese yen has appreciated so much.
With this, there are a lot of traders who have taken profit, and quite frankly have turned around their entire position around as they have gotten bullish. I believe at this point in time we will continue to go much higher, and reach towards the aforementioned 120 level, but there is a lot of noise somewhere near the 117.50 level that begins a very thick amount of noise that extends above. If we did somehow get above the 120 level, that would be a major breakout but I don’t think that’s going to happen anytime soon. Quite frankly, I feel that the Bank of Japan is threatening, and of course could intervene if things get bad enough and we continue to fall but at this point in time I think what’s going to happen is that we will have a very wide trading range in this market.
The reason I say that is that typically the JPY related pairs tend to form very noisy bottoms when we turn the trend back around, and never seem to rally straight off. Quite frankly, they have to build up a bit of a base and therefore support for a change. These pairs tend to be even more noisy than others, as trend changes tend to be very violent affairs. The central bank in Tokyo tends to get what it wants over the longer term, so I do believe that they will be successful, but there will be choppiness going forward and towards the 120 level. On the other hand, if we broke down below 114, I would consider selling for short-term move.

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