EUR/JPY Technical Analysis: JPY cross charted a falling wedge amid rising trade tensions

• The EUR/JPY cross has charted a big falling wedge pattern over the last ten days amid rising trade tensions between the US and China.
• The US is considering imposing a levy on $200 billion worth of Chinese imports, having imposed a 25 percent tariff on $50 billion Chinese imports in July. More importantly, Beijing has vowed t retaliate in kind.
• As a result, the EUR/JPY looks set to test the wedge support of 127.88 (50% Fib R of 124.90/130.87).
• A bullish falling wedge breakout would signal a revival of the rally from the Aug. 15 low of 124.90 and would allow a re-test of the Aug. 30 high of 130.87.

Hourly Chart

Spot Rate: 128.16

Daily High: 128.39

Daily Low: 128.12

Trend: Bearish

Resistance

R1: 128.32 (Sep. 4 low)

R2: 128.78 (5-day moving average)

R3: 129.00 (psychological hurdle)

Support

S1: 127.88 (wedge support + 50% Fib R)

S2: 127.18 (61.8% Fib R of 124.90/130.87)

S3: 127.00 (psychological support)