Despite the recent ECB interest rate cut, EUR/JPY has still managed to rally in the past few days. The pair has already climbed up to the 61.8% Fibonacci retracement level on the latest swing high and low on the 4-hour time frame, and this area could hold as resistance.

Stochastic is in the overbought zone, suggesting that euro bears are ready to push this pair back down. In addition, the Fib lines up with a former support area and the 134.00 major psychological level.

Shorting at market with a 50-pip stop and a target around the previous lows near 131.50 would yield a 5:1 return on risk. 

By Kate Curtis from Trader’s Way