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EURJPY Ichimoku Breakout Could be a Bullish Reversal Signal


Oct.05.2016

EURJPY Ichimoku Breakout

Oh no it didn't! Did a EURJPY Ichimoku breakout just happen? Divas, that's some crazy news and could be the beginning of some crazy stuff. So without further ado, let's take a dive into the IDDA approach to forex trading strategy development.

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EURJPY Ichimoku Breakout could be a bullish signal - Kiana Danial with Orbex EURJPY Ichimoku Breakout could be a bullish signal - Kiana Danial with Orbex

 

Technical Analysis - EURJPY Ichimoku Breakout

So... The Japanese yen is losing power, eh? From yesterday's breakout of USD/JPY above the Ichimoku cloud, to Thursday's EUR/JPY. Mr. Japanese Yen might be on to something. After a long period of down trend below the cloud since August 2015, Thursday's EURJPY Ichimoku breakout marked a 14-month victory.

Even though the pair started to retrace at the beginning of Thursday's Sydney session, the initial market open above the Ichimoku cloud is what gave us the first bullish signal.

Need more? The pair also broke above a symmetrical Triangle chart pattern, as well as a pivot level of 114.50.

EURJPY-Ichimoku-Breakout-could-be-a-bullish-signal-Daily-Chart-Technical-Analysis EURJPY-Ichimoku-Breakout-could-be-a-bullish-signal-Daily-Chart-Technical-Analysis

Economic Calendar

Thursday:

China is on a bank holiday today but during the Sydney session, China’s trading buddy, Australia released its Trade Balance.

During the London session the first hot market moving data is out of Switzerland as they release their CPI at 7:15 AM GMT, and later Euro zone will release their PMI at 8:10 AM.

During the New York session Challenger Job Cuts at 11:30 AM out of the US could create a little bit of volatility, but the real volatility could be later at 12:30 PM when the US releases their Unemployment Claims.

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Friday:

During the Asian session Japan released their Leading Index, and coming up during the London session, the UK will release their industrial and Manufacturing Production for the month of August at 8:30 AM GMT.

As we move on to the New York session, Canada and the US will dump a bunch of economic data right at 12:30 PM GMT, including US Unemployment Rate which is expected to have remained the same at 4.9%, Change in Non-farm Payrolls which is expected to have risen to 170K from last month’s 151K, as well as Canada’s jobs reports which could create a ton of trading opportunities in the USD/CAD pair depending on the outcome.

But things won’t end here, Canada’s Ivey PMI will be released later at 2 PM GMT, and some FOMC members are scheduled to speak about the US economy starting at 4:45 PM to end the trading week in style.

 

Trading Strategy - EURJPY Ichimoku Breakout

 

While we didn't specifically have major economic data behind JPY weakness, the momentum of the market seems to have changed for Mr. Japanese Yen.

However, keep in mind that for every yin there is a yang. So in the short-term, we could see a bit of a pullback in the EUR/JPY pair, while our long-term outlook could very soon change completely into bullish

Bullish Scenario

Traders with high risk-tolerance can enter a medium-to-long term bullish position, targeting the 23% and 38% Fibonacci levels at 117.75 and 122.10 respectively.

Traders with lower risk-tolerance must wait for the Chiko span to break above the Ichimoku cloud.

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Bearish Scenario

There is always a chance that this was a FALSE BREAKOUT. In which case the pair could break back below the Ichimoku cloud to get back on track with its good-ole downtrend.

A break below 114.75 is your first cue, followed by 113. Support levels are set at 111 and 109 in extension.

 

Here are Invest Diva's calculations for important EUR/JPY  approximate levels to keep an eye on from a long-term perspective:

Support Levels Turning Point Resistance Levels
109 113 117.75
111 114.75 122.10

 

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 xoxo

Kiana 喜愛成
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