The EUR/JPY pair fell during the bulk of the session on Thursday, but the 138 level held true as far as support. That being the case, the market should continue to find buyers down in that general area, and I am not hesitating at all to start trading this pair to the upside as we are approach that level. Ultimately, I believe that this market will continue to be supported down in this general vicinity as we form some type of base. That base could send the market as high as the 140.50 level first, and then to the 140.50 level next.
I believe that the Euro has been sold off a bit too much in general, and as a result the pair should continue to go higher. On top of that, the Bank of Japan is trying to keep the value of the Yen down, which of course sends this market much higher given enough time.
138 is massive on the longer-term chart as well.
The 138 level is massive as far as supporting resistance is concerned on the longer-term charts, and as a result I will continue to play off of this level quite a bit. On the other hand though, if we broke down to a fresh, new low, I think this market could drop to the 135 level which is the next major support area in this market. I would be very aggressive down there looking for long-term buy-and-hold type of situations, as that area is even more interesting and certainly more supportive in longer-term charts.
Ultimately, I think that the market should continue to go much higher given enough time, but don’t forget that there are a lot of headlines out there that have people freaked out from time to time, and as a result this pair will often selloff in signs of risk aversion as the Japanese yen is considered to be “safer” than the Euro. As risk appetite increases, this pair tends to go higher and will often move with the overall sentiment of stock markets around the world.