- EUR/JPY prices reverse off critical weekly support– focus is on break of 120 – 121.74 range
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EUR/JPY is poised to mark an outside-day reversal off major weekly support and leaves the broader short-bias vulnerable heading into the close of the week. These are the updated targets and invalidation levels that matter on the EUR/JPY weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this trade setup and more.
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EUR/JPY Price Chart – Weekly
![EUR/JPY Price Chart - Euro vs Japanese Yen Weekly - Technical Outlook](https://a.c-dn.net/b/2TBeMb/EURJPY-Price-Chart-Outside-day-Reversal-Off-Key-Support-Post-ECB-Euro-Japanese-Yen-Technical-Outlook_body_EURJPYPriceChart-EurovsJapaneseYenWeekly-TechnicalOutlook.jpg)
Notes: EUR/JPY dropped into a critical support confluence at 120.02/25– a level defined by the 61.8% retracement of the 2016 advance and the 100% extension of the 2018 decline. Price is now poised to mark an outside-day reversal off fresh two-year lows on the back of today’s European Central Bank interest rate decision and the battle lines are drawn.
Initial resistance stands with the July high-week / weekly reversal close at 121.74 – note that the median-line of the broader descending pitchfork formation we’ve been tracking off the 2018 highs stands just higher. A breach / close above this zone is needed to suggest that a more significant low may be in place near-term with such a scenario targeting a rally back toward the key inflection zone at 123.35/65.
A break / close below this key support confluence exposes the January (yearly) swing low at 118.82 – weakness beyond this threshold would be needed to validate a break of the yearly opening-range and risk substantial losses towards the lower parallel / 2017 low-week close near ~1.17.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: EUR/JPY has now tested a critical support zone and puts the immediate focus on the 120.02 – 121.74 range – look to the break for guidance with the broader short-bias at risk while above 120. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops. IF price is indeed heading lower, look for exhaustion ahead of 121.74 on a stretch higher with the broader focus still lower while below the median-line. I’ll publish an updated EUR/JPY scalp setup once we get further clarity on near-term price action.
Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading
EUR/JPY Trader Sentiment
![EUR/JPY Trader Sentiment - Euro vs Japanese Yen Price Chart - Technical Outlook](https://a.c-dn.net/b/1Fq3Gc/EURJPY-Price-Chart-Outside-day-Reversal-Off-Key-Support-Post-ECB-Euro-Japanese-Yen-Technical-Outlook_body_EURJPYTraderSentiment-EurovsJapaneseYenPriceChart-TechnicalOutlook.jpg)
- A summary of IG Client Sentiment shows traders are net-long EUR/JPY - the ratio stands at a staggering +2.05 (67.2% of traders are long) – bearish reading
- Traders have remained net-long since April 25th; price has moved 3.7% lower since then
- Long positions are 11.6% lower than yesterday and 10.1% lower from last week
- Short positions are 22.4% lower than yesterday and 1.9% lower from last week.
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/JPY prices may continue to fall. Traders are further net-long than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger EUR/JPY-bearish contrarian trading bias from a sentiment standpoint.
See how shifts in EUR/JPY retail positioning are impacting trend- Learn more about sentiment!
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Relevant Euro / Japan Data Releases
![Euro / Japan Economic Calendar - Data Release](https://a.c-dn.net/b/31IDVl/EURJPY-Price-Chart-Outside-day-Reversal-Off-Key-Support-Post-ECB-Euro-Japanese-Yen-Technical-Outlook_body_EuroJapanEconomicCalendar-EURJPYDataReleases-TechnicalOutlook.jpg)
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
- Silver (XAG/USD)
- Euro (EUR/USD)
- British Pound (GBP/USD)
- Loonie (USD/CAD)
- Aussie (AUD/USD)
- Gold (XAU/USD)
- Crude Oil (WTI)
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex