Technical Analysis – EURJPY bounces off 2-month lows; bearish trend pattern intact
EURJPY is looking for a rebound after confirming a bearish trend reversal pattern and diving as low as 122.36, the weakest price in two months.
The RSI and the Stochastics are justifying any attempt to halt selling pressures as both indicators have bottomed out in oversold area and are heading higher. However, the market has yet to correct the bearish cross between the 20- and the 50-day simple moving averages (SMAs) and that keeps some caution about the market trend.
Moreover, the bearish head and shoulder pattern, which has alerted the start of a downtrend, remains intact as long as the price continues to trade below the 124.40 neckline. A close above the 123.00 level, which has been a key barrier to upside moves over the past sessions, could help the price to re-challenge the 124.40 border. If it successfully violates it, climbing above its 20- and 50-day SMAs and the Ichimoku cloud too, the door would open for the 125.60 restrictive region and then for the 126.40 resistance zone.
Failure to close above 123.00, would shift the spotlight back to the 122.00 level, where the 38.2% Fibonacci of the May’s rally is placed around. Retracing lower, the 200-day SMA and the 50% Fibonacci both around 120.75 could be the next target.
Meanwhile in the medium-term picture, the outlook turned neutral following the break below the 124.40 neckline.
In brief, EURJPY could recoup some losses in the short term as the market seems to have reached the boundary of the oversold territory. Yet, fears that the downtrend may continue will remain unless the price posts a sustainable move above 124.40.
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
