EUR/JPY Breaks Out of Resistance as the Bulls Remain in Control | KOL Analysis•Dane Williams

As forex markets start the week exactly how they left off, EUR/JPY is looking to continue its march higher. It‘s a market that’s certainly in-play during Monday‘s Asian session, flirting with a key daily support/resistance zone that we’ll certainly be keeping an eye on going forward through the week ahead.

Euro bulls are still benefiting from risk-on flows, coming thanks to Eurozone leaders coming to somewhat of an agreement on how to best allocate the 750 billion euro stimulus package created to stimulate the struggling bloc. This is the unpredictably self-serving Eurozone however, so well look to remain nimble and ready to pivot if price action shows a noticeable shift in sentiment.

But lets take a look at the charts, shall we？

EUR/JPY Retests Broken Daily Resistance Zone

The key EUR/JPY daily support/resistance zone in-play, sits either side of the 122.916 level. While you can see that price had chopped through it during the initial Covid-19 panic spike, price has since continued to respect the zone. Most notably this week, putting the pair at the top of our watch list.

Take a look at the higher time frame zone Im referring to on the EUR/JPY daily chart below.

EUR/JPY Daily:

You can see that Ive marked the last swing high price point that we saw a hard rejection from. By looking back along the zone to your left, you can also see multiple other price spikes and rejections in the months prior.

Keep in mind that the last time price broke through the zone was on the back of a Covid-19 panic spike and most notably, was a clean momentum move. This price action tells me that even though price has broken through the zone, its still highly significant.

EUR/JPY Confluence of Support on the Hourly

The price action Im referring to above is something you can clearly see is true when zooming into the EUR/JPY hourly chart to take a look at the most recent, intraday price action.

EUR/JPY Hourly:

With the same daily support/resistance zones visible, we can see that after breaking out higher, price pulled back to retest broken resistance this time as support. What we can also see here is a clear confluence of support, as we see a clear retest of short term resistance turned support too.

This confluence of support across both charts, puts price above key support on multiple timeframes and continues to build a case for the bulls remaining in control of EUR/JPY. Overlapping zones that we can use to manage our risk around as we look to trade in the same direction as market flows.

Depending on your own trading strategy and personal tolerance to risk, both the daily or hourly support/resistance zones can be used to place your stop-loss just beyond. If price did move sharply lower through these zones, the bulls would no longer be in control and the long setup no longer valid.

With this in mind, if price tucks back under the zone, look for it to be reactivated as resistance and the opposite applied when looking for shorts.

Best of probabilities to you.

[About the Author]

Dane Williams is an experienced forex market analyst and trader with experience across forex, cryptocurrency, commodity, index and futures markets. With over 10 years in the game across multiple roles, Dane has worked as a market analyst for Australian forex broker Vantage FX, worked as a daily blogger with ForexLive and now hosts his own forex consulting service under the ForexBrokr brand.

Dane‘s expertise as an analyst is primarily technical, focusing on teaching traders how to manage their risk around key support/resistance zones within the markets. Something he’ll be sharing with WikiFX subscribers twice weekly going forward.

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