Focus is on Germany and other than the challenges Merkel is facing while she tries to constitute a government, some pretty good news were reported today. Germany’s and Eurozone Manufacturing PMI posted better than expected results. With such bullish economic indicators Euro bulls can only hope the Eurozone’s largest economy shall weather the “small” crisis.
In other news, yesterday the Feds released their minutes of previous meeting and yes, they expect the economy to strengthen and rates to be raised in the near term. Even though that could be interpreted as slightly bullish, the lack of inflation expansion poured cold water on the otherwise good news. Inflation has been tepid and according to Fed officials, future rate hikes depend on inflation growth towards or above the 2% ideal Fed target by December.
Despite those conditional statements, the Fed Fund rate trackers put the probability of another 0.25% rate hike at 91.5%.
To the charts now and today I’m looking to buy the Euro and sell the Yen. In the daily chart we notice that price action has been trending within a 300 pip range marked by September 22 highs and October 31 lows. Furthermore, notice that €131 is a previous resistance level turned support and Yen bulls have not breached it in 3 different occasions resulting in that triple bottoms. Either way, if there is a breach below $131, then we expect a strong bearish candlestick and if not, a bounce open doors for November 6 highs of around €132.
In the 4HR chart, the picture is clear. There is a stochastic buy signal and a bullish divergence in place relative to price action over the past 3 days after those double bottoms on November 20 and 22.
This shall be our trade plan:
Buy stop: 132
Take Profit: 133.20
Stop loss: 131.60
Have a good trading day.

EURJPY 4HR chart-November 23, 2017

Source: Dalmas FX

EURJPY Daily chart-November 23, 2017

Source: Dalmas FX

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