When you develop a long-term trading strategy for EUR/JPY, it will be useful to look at the trading history of this currency pair in the past few years.
So, if you look at the weekly chart of the EUR/JPY, you will notice continuous growth from October 2000 to July 2007. These are seven years of uninterruptible increase from the level of 88.87 to 168.93. A stairway to heaven of eight thousand pips! There are even some legends about the golden era of Forex carry trade. You would first think there is nothing difficult in it: buy on a pullback and hold the position as long as you have enough patience. Then collect the harvest! However, everything in this world (both good and bad) comes to an end one day. On July 20, 2007, the cross began its catastrophic fall from the level of 168.93, which ended a month later on August 17, 2007 at the level of 149.26. Just in a month, the pair lost almost 2 thousand pips. It was this steep plunge that has determined the behaviour of this trading instrument until the present moment. In other words, a giant trend was followed by a giant flat.
In fact, if you move from the weekly chart to the daily one, you can distinguish several rather good trends within the boundaries of a huge sideways trend. The most stable is the upward trend which started on March 20, 2008 from the level of 151.71 and finished on June 14, 2008 at the level of 169.96. The price tested this new historical level twice, then it turned down again and went almost a half of the wide price channel. This situation can hardly indicate any sharp trend movements. Of course, trends exist here but only in the medium and short-term perspectives. At a large scale, the price continues fluctuating within the range of 2,000 pips until a major reversal starts or the upward movement goes on.
Thus, when you open long-term positions on this instrument, it is rational to use outlined relevant price levels. The accumulation of price levels 169.96, 168.93, and 167.67 in the resistance area can be considered significant. Also, the level of 152.11 can be considered relevant. The price has tested this level three times: on 22nd of January, 14th, and 20th March 2008. The support level of 149.26 can also be mentioned as relevant, though it has never been reached after August 17, 2007. It is also important to take into account the price range from 158.27 to 159.34 because there is a great number of pivot points during the medium-term fluctuations. Furthermore, this range is located approximately in the middle of the global price channel. The strategy is very simple. First, you should wait for the instrument to reach the relevant price level. Then, you watch closely the price behaviour and make your trading decisions based on the observation results.