To start the new year off the Eur/Jpy cross confidently broke through well defined horizontal support and an ascending trendline. The pair then moved down to a low of 123.529 the day before the Yen flash crash. After the flash crash the pair put in a timid rebound that has stalled just below previous support turned resistance and consolidated into a tight range between the 50% fib retracement of the June 2016 low to January 2018 high, and the 38.2% retracement of the December 2014 high to June 2016 low. I stated in a previous idea that should the Eur/Jpy pair break through the support mentioned at the start of this post my bias would shift short, and nothing has changed. A break above this range will not prompt a trade as technically the trend appears confidently lower and fundamentally the recent data and sentiment out of Europe has been disappointing. In addition to this a risk off mood seems to be creeping back into the market as trade war concerns continue and global growth slows. With all this in mind there seems to be a definite lop sided risk to the down side in this cross with a defined technical pattern that we can use to take advantage of it with. The attached image shows potential stops and take profits, ideally a break lower occurs, followed by a rebound that enables us to enter our short positions.
*This is not a recommendation to buy or sell, it is for educational purposes only*