EUR/JPY (daily chart) as of March 11, 2013 has resumed its bullish rebound towards 128.00 after having recovered from a significant downside correction just a few weeks ago that broke below major support areas, including both the 123.00 and 120.00 levels. The pullback brought price down to a 118.73 low, which was around an important 61.8% Fibonacci retracement level, before initiating the rebound in late February. Since then, the pair has re-captured the 120.00 and 123.00 levels in a 2-week rally that has now brought price back up to around the 125.00 level.
With continued bullishness on this rebound, EUR/JPY may be poised to target 128.00 yet again, a major resistance level that it narrowly fell short of when it established a 34-month high at 127.69 in the beginning of February. To the downside, strong support has been re-established around 123.00 within the context of the strong uptrend. In the event of a breakout above 128.00, a bullish trend continuation would be confirmed with a further upside target around the key 131.00 area.
James Chen, CMT
Chief Technical Strategist
City Index Group
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