EUR/JPY just broke below a technical pattern!
If you haven’t noticed, a combo of risk aversion and a burst of yen strength dragged major JPY pairs lower in the last trading sessions.
In EUR/JPY’s case, all the yen-buying has translated to an extension of a downswing that began when the pair got rejected at the 151.00 psychological handle.
The pair is now trading closer to 149.50, which is below the 100 and 200 SMAs on the 1-hour time frame.
More importantly, it’s also below the ascending channel pattern on the chart.
Are we looking at a bearish reversal for EUR/JPY?
EUR/JPY 1-hour Forex Chart Chart by TV
Current market themes are saying “bet.”
For one thing, China’s PMI misses earlier today are putting the spotlight back on global growth concerns now that it looks like the U.S. isn’t in danger of defaulting on its debts.
An unscheduled meeting between Japanese finance officials have also spooked some JPY bears into selling the yen crosses near the end of the month.
Finally, the Eurozone’s flash CPI estimate scheduled tomorrow is expected to show slower price growth in May. A slower CPI would give the European Central Bank (ECB) one less reason to raise its interest rates further in its next meeting.
For now, I’m keeping close tabs on how EUR/JPY reacts to the S1 (149.42) of today’s Standard Pivot Points.
A bounce from the level opens the possibility of a break-and-retest scenario near the Pivot Point (150.18) and broken trend line support zone.
But if EUR/JPY breaks through the S1 support, then I’ll consider selling at market and taking profits near the 148.70 area of interest if not the 148.00 psychological handle near the S2 (148.08) zone.
If I miss the breakout downswing, then I’ll also consider drawing a trend line resistance from this week’s highs and jump in at potential trend line retests.
How about you? Are you also in the “EUR/JPY reversal” camp?
This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.
Comments are closed.