Adam posted how Westpac thinks the EURJPY is topping.
- Selling the pair on a small rally to 126.20
- Target at 123.65 and
- Stop at 126.90.
What is may take?
From my technical perspective, I like the sell, and the highs from today were a decent level to do that.
Looking at the hourly chart above, the highs today (and yesterday) were right near the 61.8% of the move down from the March 20 high at 125.59. It was also right near the 200 bar MA on the 4-hour chart at 125.58. The swing highs over the last 24 hours stalled at 125.59-61 on four separate tests (red numbered circles). That is a pretty good ceiling that traders leaned against, and the price did rotate lower.
With the ceiling in place, the price may not get up to the Westpac 126.20 level to sell. In fact, if it did get up there, it would imply moving above the ceiling, another topside trend line AND the key 100 day MA at 125.94 to get there.
I would not be big on selling with the price just breaking above the 100 day MA.
So for me, the better trade would be to sell against the 200 bar MA on the 4-hour, the 61.8% retracement and the ceiling develop there over the last 24 hours. That is close risk for a sale.
Of course, the fall from the high did wander lower today, with the price trading below the 100 hour MA at 125.303 and an upward sloping trend line (see green numbered circles). The pair is testing the 100 bar moving average on the 4 hour chart at 125.159 currently.
The next key target on the downside would be the 124.981 level. That is the 200 hour moving average and that also is near lows from Thursday last week and on Monday. A move below that level is open road ahead for further downside momentum that could indeed bottom near the March lows between 123.649 and 123.819.
So, if you did sell earlier, I like the short below the 125.60 area. We currently are testing MA levels that can give cause for pause. However, if the 200 and moving average is broken at 124.981, the stop can be managed down, with targets at the April lows (see green circle 3) another key level to get below.