EURJPY TECHS: Sell-Off Exposes Support

• RES 4: 166.69 High Oct 31 
• RES 3: 166.31 2.0% 10-dma envelope  
• RES 2: 166.10 High Nov 6
• RES 1: 165.04 High Nov 15 and a key short-term resistance
• PRICE: 163.08 @ 16:11 GMT Dec 30
• SUP 1: 162.82 Low Dec 30   
• SUP 2: 162.31/159.82 20-day EMA / Low Dec 18
• SUP 3: 158.67 Low Dec 11
• SUP 4: 157.87 Low Dec 09

EURJPY has pulled back from Monday’s high, but a bullish short-term  condition remains intact for now. Initial firm support lies at 162.31, the 20-day EMA. The cross has recently breached all the relevant Fibonacci retracement points of the bear leg between Oct 31 - Dec 3. A resumption of gains would open 165.04, the Nov 15 high. Clearance of this hurdle would open 166.69, the Oct 31 high and the next major resistance.

• RES 4: 123.34 High Dec 11 and key resistance     
• RES 3: 122.85 High Dec 12  
• RES 2: 121.94 High Dec 13  
• RES 1: 120.70/121.03 High Dec 20 / 20-day EMA   
• PRICE: 119.98 @ Close Dec 30 
• SUP 1: 119.41 Low Dec 27         
• SUP 2: 119.11 Low Nov 18   
• SUP 3: 118.80 76.4% retracement of the Nov 7 - Dec 11 bull cycle
• SUP 4: 118.51 Low Nov 8     

A corrective cycle in BTP futures has resulted in a pullback from its recent highs and last Friday’s sell-off highlights and extension of the current bear cycle.  The contract has recently breached the 20-day EMA and sights are on 118.80, a Fibonacci retracement point. Key resistance and the bull trigger has been defined at 123.34, the Dec 11 high. Initial firm resistance is seen at 121.03, the 20-day EMA.

The People's Bank of China should cut the reserve requirement ratio and interest rates in a timely way and make good use of monetary tools including open market operations to maintain ample liquidity to continuously increase support for the real economy, wrote Han Wenxiu, deputy director of the Office of the Central Financial and Economic Affairs Commission in an article published by the party-run People's Daily. It's also necessary to maintain relatively fast credit growth and lower financing costs, while stablising the currency at an equilibrium level, said Han.