Forex: EUR/JPY ready for the next leg up?

FXstreet.com (Barcelona) - The EUR/JPY closed the day sharply higher, up 78 pips at 130.20. During the European session, the pair seemed to get a boost from German Industrial Production (MoM) which came in at 1.2% vs.-0.1% estimate. Data will be light in the next session as European markets will be closed for holiday.

According to Val Bednarik of FXStreet.com, “The EUR/JPY managed to recover the 130.00 level, mostly due to Euro strength, as despite stocks soaring yen bears remain on hold. With a triple roof in the 130.40 area, the level should attract sellers if reached, although stops are likely right above, and if those get triggered, a strong upward continuation is likely for this Thursday.”

From a pattern perspective, the EUR/JPY finally closed above the upper boundary of the large ‘pennant’ continuation pattern which has been forming since early April. The pattern was completed with a close above 129.75, and has a measured move target near the 135.85 area. Furthermore, the pair will now need to hold this previous resistance trend line as support, or the pattern will be negated.