The EURJPY pair in triangle pattern
The EURJPY pair above is moving in a contracting triangle pattern that forms at the end of a complex correction and what is important here to remember is that the pattern is forming on the daily chart.
Taking into account the fact that all legs of a contracting triangle are corrective in nature, this wave d to the upside should be a tricky one both for bulls and bears.
However, bulls should prevail here in the sense that price cannot go much lower and if we were to put a fundamental reason to this trade then the ECB March meeting should be extremely important as most likely the European Central Bank will cut the rates further into the negative territory.
Negative rates have the effect of lowering the currency and as a consequence the Euro should drop all over the dashboard, with all pairs being affected. But this is not possible on the EURJPY as the pattern above should have wave d retraced at least 50% of the distance traveled by the previous wave.
How to trade
This means we should move higher in the cross before the ECB March meeting and the dip into this 129.20 area looks to be a good opportunity for buying a call option.
As for the expiration date, aggressive traders should go with end of day expiration but considering the time frame this one should be considered a risky trade.
A more conservative approach would be to trade a call option from this 129 area with end of week (Friday at the close) or even end of month as the potential for a bounce increases with each and every day that passes.