Nick Nasad
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EUR/JPY: Slice Through Short-Term Support Empowers Bears

The EUR/JPY sliced through short-term support at the 139 level overnight, extending its downswing.

  • The pair has established a well defined downward channel over the last month, and today's breakdown continues to favor the bear's case.
  • Looking at the structure of the top, it can be seen as a type of head and shoulders, with the high near 145.20 and the neckline at 141.
  • That is a 420 pip distance, and projected from the neckline targets the 137/136.20 level, a target that would be the target for further downside action.
  • With equities continuing to sell off, the likeliest strategy would be to sell rallies (especially ones that test the old support near 139 as resistance) until risk sentiment changes.