FX.co ★ Strategy of the day on EUR/JPY

The spot rate approaches the upper limit of its medium-term bullish channel at 131.10 suggesting a decline. However, a break of this level will initiate a more violent bullish channel.
Technical indicators provide sell signals and until the resistance is not broken the assumption of a decline is most likely. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in the short term.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 131.10 with the 1st objective at 130.50 and then at 130.30. A breakthrough of 131.30 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 131.10 with the 1st objective at 131.70 and then at 131.90. A breakthrough of 130.90 will invalidate this scenario.