The EUR/JPY pair appears to have broken out of a horizontal consolidation that resembles a bullish flag. According to the pattern, the measured move points to much higher levels than the current ones.
It is not surprising because the euro traded with a bid tone lately. The failure of the ECB’s communication and forward guidance has led to market participants testing the ECB’s patience.
The euro remains bid across the board, and the market will likely remain bid as the ECB’s decision looms. However, bulls should be cautious as the EUR/JPY cross has strong dynamic resistance ahead, where bears will likely step in.
EUR/JPY Technical Analysis
The technical picture shows bullish conditions on the EUR/JPY cross. After all, the market remains in a rising trend and just pushed to a new higher high.
Yet, contrarian traders may have an opportunity to fade the move once the price reaches the upper edge of the rising channel. On such a move, bears may want to sell with a stop calculated as the width of the rising channel projected from its upper edge. As for the take profit, the usual 1:2 or 1:3 ratio should be appropriate. The ECB’s decision and press conference on Thursday looms large on the euro.
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EUR/JPY Price Action
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