EURJPY - Consolidating Channel for Post French Election
Political risk marring the Euro will continue until the conclusion of the the French Election. Marine Le Pen is still the most significant political risk for the Euro and recent price action would confirm that markets are more adverse to this risk than upbeat economic data releases of late.
We have the possibility of a bullish consolidation pattern forming here - either a flag in white dashed or a parallel channel in green.
There could very well be a bounce off the bottom of the flag as price is hung around 118.15 area where this is near term structural support and also the upward TL in blue. This is substantial support however I do not feel this will hold where the next area of support will be the 116.15 area. This is where I am looking to long next week as French election approaches.
A Le Pen defeat will mark the end of near term political risk to the Euro which has been like an anchor as of late. But since this is a Yen cross, it may be hampered by the rhetoric from Erdogan but only if it emboldens a Turkish shift to Russian support and populist disruption in UK and EU during the Brexit negotiations.
Aggressive traders may enter at market but due to public holidays in China and HK - Asia session will have less liquidity on date of post so expecting slightly more volatility on EU open.
Tentative long targets from entry of 116.xxx as follows:
Target 1: 122.XX
Target 2: 127.85~
We have the possibility of a bullish consolidation pattern forming here - either a flag in white dashed or a parallel channel in green.
There could very well be a bounce off the bottom of the flag as price is hung around 118.15 area where this is near term structural support and also the upward TL in blue. This is substantial support however I do not feel this will hold where the next area of support will be the 116.15 area. This is where I am looking to long next week as French election approaches.
A Le Pen defeat will mark the end of near term political risk to the Euro which has been like an anchor as of late. But since this is a Yen cross, it may be hampered by the rhetoric from Erdogan but only if it emboldens a Turkish shift to Russian support and populist disruption in UK and EU during the Brexit negotiations.
Aggressive traders may enter at market but due to public holidays in China and HK - Asia session will have less liquidity on date of post so expecting slightly more volatility on EU open.
Tentative long targets from entry of 116.xxx as follows:
Target 1: 122.XX
Target 2: 127.85~
Trade active:
We are on - watching as this likely to be a 90~120 pip retracement only
If polls afterwards show Marcon break the 30% mark and Fillon holding steady at ~ high sub 20's then we may see a nice surge in the Euro against the yen as the risk of a Le Pen lead 'Franxit' abates