A day before during the New York session, EUR/JPY crashed dramatically by more than 200 pips. The sell-off was triggered after the release of Japanese GDP figures. The Japanese economy expanded quicker than originally estimated in the fourth quarter as capital expenditure staged a swift recovery from a series of natural disasters in the previous quarter.

Japanese GDP (gross domestic product) climbed at an annualized rate of 1.9% in October-December, higher than the initial forecast of a 1.4% annualized growth rate.

That followed a revised 2.4% annualized reduction in the third quarter, which was the biggest drop in more than four years. This improved the sentiment regarding the Japanese economy and fueled hopes that the Bank of Japan won’t lower the interest rates further.

EUR/JPY is trading around 124.350 stuck deep in the oversold territory. It’s forming a Doji pattern on the 4 hourly charts which is suggesting a bullish correction above 124.250. Above this level, the pair is likely to go after a 23.6% Fibonacci retracement level of 124.780 and 38.2% level of 125.10.

Support Resistance
124.24 126
123.58 127.1
121.81 128.86
Key Trading Level: 125.34

Team FX Leaders just opened a buy position above 124.250 with a stop loss below 123.08 and take profit at 125.28.

All the best!