EURJPY has been back and forth across the key 131.15 pivot area as we look for whether the break here is for real. If not, today’s activity still softens the uptrend.
The technically important EURJPY area around 131.15 came into play today. This was both an old high posted shortly after Kuroda’s Big Move and more recent support. During the overnight meltdown, we even touched the 130.00 level in the pair before it rallied so far to just shy of a 38.2% retracement of the move from the top to bottom (that level comes in at 131.43).
From here, the next move through 130.00 is worth considering for a follow-up move to the Ichimoku cloud level on the daily, currently at 126.56. To the upside, the major tactical flat-line resistance is at 132.00, with 61.8% Fibo resistance at 132.35. If the latter is taken out quickly, we may quickly accelerate back to recent highs, but tactically, I prefer a bearish stance until proven otherwise, and this sell-off is beginning to put major cracks in the rally even if it proves a false start for bears.
One thing is for certain – volatility is vicious in the JPY crosses (1 week at the money options cost more than a figure in premium) and one needs to tread carefully. Kuroda is out speaking overnight at 0255 GMT and last night we had the worst session on the Nikkei since the March 2011 Tsunami.
Note that another sweep back lower would also bring more bearish larger scale developments into play, like a move of the trailing green Chikou line through the price.
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