- The EUR/JPY cross has charted a big falling wedge pattern over the last ten days amid rising trade tensions between the US and China.
- The US is considering imposing a levy on $200 billion worth of Chinese imports, having imposed a 25 percent tariff on $50 billion Chinese imports in July. More importantly, Beijing has vowed t retaliate in kind.
- As a result, the EUR/JPY looks set to test the wedge support of 127.88 (50% Fib R of 124.90/130.87).
- A bullish falling wedge breakout would signal a revival of the rally from the Aug. 15 low of 124.90 and would allow a re-test of the Aug. 30 high of 130.87.
Hourly Chart
Spot Rate: 128.16
Daily High: 128.39
Daily Low: 128.12
Trend: Bearish
R1: 128.32 (Sep. 4 low)
R2: 128.78 (5-day moving average)
R3: 129.00 (psychological hurdle)
Support
S1: 127.88 (wedge support + 50% Fib R)
S2: 127.18 (61.8% Fib R of 124.90/130.87)
S3: 127.00 (psychological support)
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