EUR/JPY has bullish sentiment signal, but keep an eye on big support
EUR/JPY remains favored for higher prices based on sentiment signal, but only as long as key support remains intact.
EUR/JPY sentiment, price, and analysis
- EUR/JPY client positioning remains in favor of a rally
- Big price support is key to maintaining a bullish stance
The euro remains pointed higher versus the Japanese yen from both a sentiment and technical standpoint. There are a couple of things traders can watch to determine if this will remain, or the bias will shift to the downside.
EUR/JPY IG client sentiment
EUR/JPY retail trader data shows 42.29% of traders are net-long with the ratio of traders short to long at 1.36 to 1. Taking a contrarian viewpoint, it suggests that with nearly 58% of retail betting against a further advance that we will see the cross continue to rise. However, if we see a sudden change of direction in price below support (discussed below) coupled with a sizable surge in buying, this could signal that a larger decline may get underway.
EUR/JPY IGCS chart
EUR/JPY technical outlook
This far, adding to a bullish sentiment bias is strong price action since hitting support around the ¥12,440 mark. This is a big level of support to watch as it has several inflection points; the June high along with a couple of holds as support in August. This week’s test further cements its importance moving forward.
Looking higher there is a decent amount of resistance that could challenge a bullish outlook, though. Th recent highs last month and this month in the vicinity ¥12,675/¥12,705 could prove difficult. An advance through there will find EUR/JPY in a face-off with a big trend-line from 2014 that crosses over the 2018 peak. This will be an interesting intersection to watch. A breakout through could find the pair with room into the ¥13,000s, but a turn down may again have big support in focus around ¥12,440.
All-in-all, we continue to give the near-term strength the benefit of the doubt between support holding and the sentiment outlook, but that bias could change with a break of support and shift in retail positioning.
EUR/JPY daily chart
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets