EURJPY Analysis - Bullish - Trade 05

4 Ara

EUR/JPY Analysis Overview

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1. Seasonality

EUR: Strong seasonal buy signal for first week of December. Historically, EUR tends to perform well during the early part of December, particularly as year-end market dynamics drive demand for European assets.

JPY: Seasonal performance is mixed to weak in first week of December, suggesting potential weakness for JPY in this period.

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2. COT Report

EUR:

COT RSI: At the bottom (0%) for 52 weeks, 26 weeks, and 13 weeks, signaling an oversold condition, suggesting a buy setup for EUR.

Non-commercial Positioning: Non-commercial long positions are decreasing, short positions are increasing, but net non-commercial is still decreasing. This indicates that while there may be some sell-side pressure, the market may be nearing a reversal, with less aggressive short interest.

COT Index: At the bottom (0%) for 3-year and 1-year periods, indicating a strong potential for EUR to rise from this point.

JPY

COT RSI: At the middle, indicating a neutral stance. This is less of a concern compared to other currencies, but it points to a market that is less bullish on JPY.

Non-commercial Positioning: Non-commercial long positions are increasing, short positions are also rising, and net non-commercial is decreasing. This suggests that JPY has some strength but is facing growing pressure from increased short positions.

COT Index: Neutral positioning, which does not indicate any clear bullish or bearish bias.

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3. Fundamental Analysis

LEI (Leading Economic Indicators)

Global: Increasing LEI suggests positive global economic momentum, supporting the EUR.

EUR: Positive LEI, indicating economic growth and improving outlook for the Eurozone.

JPY: Decreasing LEI, signaling a potential slowdown or economic stagnation in Japan, which is bearish for JPY.

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Endogenous Factors

EUR: Increasing endogenous factors, indicating positive growth in the Eurozone. Economic recovery is likely to continue through the end of the year, supporting EUR strength.

JPY: Mixed to increasing endogenous factors, suggesting some potential for JPY to strengthen but not strongly enough to outperform the EUR.

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Exogenous Factors

EURJPY: Exogenous factors support a buy EUR, sell JPY strategy due to the relative strength of EUR and the weakness in JPY from factors like EURJPY = Buy and EURUSD = Buy signals in exogenous correlations.

EUR/JPY Pairs: Strong support for EUR in the cross-pair comparisons (EURJPY = Buy) and weak performance from JPY, confirming a bullish stance for EURJPY.

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4. Technical Analysis

RSI Divergence: The RSI for EUR/JPY is not in overbought territory, suggesting room for further upside.
Support Levels: There is days support level from which the pair has bounced and is likely to continue upward if it maintains above these levels.

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Bias: Long EURJPY

Conclusion: The combination of favorable seasonality, positive COT signals for EUR, strong fundamental support from global and Eurozone LEIs, and bullish technical indicators positions EUR/JPY for further upside. The relative weakness of JPY and its mixed economic signals reinforce the bias to go long on EUR/JPY.

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Trade Plan

Entry: 157.241
SL: 156.020
TP: 158.462

4 Ara

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