Risk OFF mode seen at the first half of the August is messing with the bullish trend on the EURJPY. JPY is gaining strength across the market, which on this pair, allowed to initiate a first stronger correction since the June. Technical situation shows that we may be just warming up and that there is a potential for much more from the bearish camp.
The pair is in the strong up trend since the July 2016 and the latest strong bullish wave started in April this year (blue line) and allowed the price to climb almost 1700 pips higher. Global trend to flee to save heaven assets allowed the price to create a mid-term reversal pattern in the past two months. We are talking about the Head and Shoulders pattern seen on a daily chart (yellow). On Friday, the price attacked the neckline (both a red dynamic support and a horizontal green area) but buyers somehow defended and managed to create a hammer with a body above those two supports.
That delays the downswing, at least for a bit but the beginning of the new week brings us a drop again so a second try may happen sooner than we think.
As long as we stay above the 23,6% the sentiment remains positive but a breakout here should immediately trigger a sell signal. The first potential target for the sellers should be the orange area around the 125.9 but in my opinion, they can go deeper - to the 50% Fibonacci around the 123. That is the level (green area), which was respected many times in the past, starting from the end of December.
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EURJPY defending the positive sentiment on the neckline.
Published 08/21/2017, 04:45 AM
EURJPY defending the positive sentiment on the neckline.
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