EUR/JPY Price Outlook: Trading Above and Below 123.05 – Levels to Watch
EUR/JPY Technical Analysis
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EUR/JPY Daily Price Chart (Oct 2018 – May 08, 2019)
Trading in a Downtrend Pattern After Breaking Below 124.24
Since April 17th failure to break above 126.80 EUR/JPY has been trading in a downtrend pattern based off a formation of a lower high in May 1st and dropping below the April 26th low (124.08) on May 6th. On May 2nd prices closed below 124.76 marking a bearish bias and pushing towards the levels that were mentioned in last week article: Price Action Around 124.76
On May 6th EUR/JPY opened on a downside break away gap, showing more weakness. The pair closed below 124.24 and the uptrend line originated from March 28th. Prices were rejected at this level (124.24) on the following day and pulled back printing 123.10 - the lowest price in more than 4 months.
Relative Strength Index reading has declined from May 1st (46) and has rebounded off the oversold area boundary.
To summarize, a close below 123.05 would suggest more downside movement towards 122.46 contingent on prices breaking the support level at 122.95 and the support zone between 122.80 and 122.74 first. Closing below 122.46 would indicate more bearishness towards 121.13. A series of support levels need to be monitored at 122.34, 122.18 (Fibonacci 23.6% retracement), 122.00, 121.86. 121.53 and 121.22.
What if EUR/JPY RemainsAbove 123.05?
In this case, prices would push towards the high side of the trading range at 124.24. Meanwhile we need to keep an eye on resistance levels at 123.65, the two resistance zones at 123.77 – 123.85 and 124.05 – 124.08.
EUR/JPY Price 2Hour Chart (May 08, 2019)
Consolidating between 123.50 and 123.10
Since the May 7th rebound, EUR/JPY has been trading in a narrow range. If prices break and remain above 123.50 it would suggest a bullish sentiment hinting prices might push towards 123.85 if the pair break resistance at 123.65.
If the break were to the downside, and prices trade and remain below 123.10, it would suggest a bearish bias and would move prices towards 122.74 contingent on prices clearing support levels at 122.94 and 122.80 first.
Written By: Mahmoud Alkudsi
Please feel free to contact me on Twitter: @Malkudsi
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