EUR/JPY gains post ECB last week was halted by the daily cloud, we see scope for a drop back to around 132.10 levels.
- Price action has edged back into the cloud, but strong resistance is seen by 200 DMA at 134.09, the pair has been trading in a narrow 134.21 - 133.29 range since Monday.
- Falling wedge formation seen, daily Stochs are in the overbought zone, waiting for a rollover, RSI on dailies remains flat.
- Multiple Dojis and spinning tops formed show traders unwilling to take the pair higher, bias is definitely lower.
- The Japanese Yen remains boosted on the day on the back of upbeat domestic fundamentals and on increased safe haven demand, indicating further downside in EUR/JPY.
- However a close above 200 DMA could see the pair higher, but gains likely to be capped at 134.82, strong resistance (descending trendline).
- The pair is currently trading at 133.90, we would be looking to sell any rally, placing stops at 134.90 and targetting 132.10 levels.
