EUR/JPY - Weekly

EUR/JPY - 4 Hourly

Today's Support and Resistance Levels: 

S1: 103.50                    R1: 103.97

S2: 102.68                    R2: 104.42

S3: 102.17                    R3: 104.75

Technical Overview:

As we have entered a new month, we should take a look at the larger picture too. So, the upper chart is the weekly chart of the EUR/JPY pair. As we can see, we have just tested the long-term downtrend line going back to early 2011. It seems likely that it will not be an easy fight; we suppose to observe a deeper correction back towards at least 100.58 and more likely 99.35, as wave ii is needed for EUR to regain strength enough to break clearly above this long-term resistance. Once it is broken it opens up for a much larger rally higher towards 111.43 as the first major target.
Looking at the 4 hour chart below, we can see that minor resistance at 103.39 was broken yesterday. It is resulted in a move higher towards 103.94 (our target was 103.92). However, we should be close to a top and a new decline towards support at 101.45 starts. A break below 103.50 will be the first good indication that the expected decline has begun. As we have said, a break above 104.42 is needed to invalidate our bearish scenario and call for a new high above 104.59.

Trading Recommendation:

You should be short EUR from 104.50 with a break-even stop. If you are not short EUR already you could sell here or upon a break below 103.50 with the same stop.