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Forex: EUR/JPY nearing ‘pennant’ pattern break out on daily chart?

FXstreet.com (Barcelona) - The EUR/JPY finished the day up 196 pips at 129.86. At one point during the US session, the pair traded as high as 130.34 but was unable to maintain these levels and leaked slightly lower later in the day. It will be a busy session of economic data out of Europe, with Market Services PMI (7:58GMT), Retail Sales (9:00GMT), and finally ECB President Margio Draghi will be speaking at 13:00GMT.

According to Chris Capre of 2nd Skies Forex, “Despite having a few setbacks, this pair continues to build up buyers consistently around the dynamic support and daily 20ema which has held the pair up since the middle of April. The strong buying on Friday erased several days of losses, so the pair should likely challenge the yearly high at 131.22. Bears can look for intra-day price action signals here, while bulls can look for pullbacks into the 20ema and 128.50 region to get long, but this type of price action building with the consistent HL's (higher lows) while having a consistent high suggests upside continuation.”

From a technical perspective, the pair is nearing the upper end of the ‘pennant’ continuation pattern it has been forming since early April. A daily close above 129.90 (closed Friday at 129.86) would be needed to confirm the pattern, which has measured move price objectives of apx 136.00. The short term moving averages remain in bullish set up, with price above both the 9 and 20dma’s. Initial support sits at 128.93 (the 20dma), while initial resistance is at 130.34 (the Friday high)

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