Morning report

The same Elliott sequence has been formed on the EUR/JPY pair but in addition to the negative divergence that may cause a strong reversal action, a minor bearish harmonic butterfly has been caught. Therefore we think that the intraday outlook is to the downside to activate the first corrective wave of the entire sequence. Note that a breakout below 136.20 will confirm the negative effect of the hanging man pattern -secondary image-.

Trading range for today is among key support at 133.60 and key resistance now at 139.20.

The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels.

RecommendationBased on the charts and explanations above our opinion is, selling the pair from 136.70 targeting 134.80 and stop loss above 138.25 might be appropriate.