Techs – Eur/Jpy: The latest sharp rally is starting to look very stretched and the risks from here are for a decent sized corrective pullback at a minimum over the coming days. The daily RSI is above 75 and stochastics are by 95. As a measure of just how overbought the cross is, only 2 of the past 12 days have been down-days and even those days were only marginally lower at the close, with one of the two days managing to put in a daily higher high and higher low (see 19Mar). An intraday chart shows the formation of a head & shoulders top and we will look to sell the break of the neckline in anticipation of the onset of a decent pullback over the coming days. Strategy: SELL @133.20 FOR A 128.15 OBJECTIVE, STOP @135.20. Stops to be trailed to cost (break-even) on a break back below 132.00. If trade triggers and 132.00 not broken, position to be closed out at NY close (5pm EDT) on Tuesday. Recommendation to be removed if not triggered by NY close on Tuesday.
Written by Joel Kruger, Technical Currency Analyst for DailyFX.com
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