Euro vs Japanese Yen Technical Analysis
Slowing Down Momentum
On May 6, EUR/JPY printed its lowest level in three and a half years at 114.43 then rallied after as some bears seemed to cover. Yet, the weekly candlestick closed in the red with a 1.5% loss. This week, more bears have eased up allowing the market to rally further.
Alongside that, the Relative Strength Index (RSI) rose from 35 to 46, highlighting a weaker bearish momentum.
EUR/JPY Daily PRice CHART (JULY 1, 2018 – May 15, 2020) Zoomed Out
EUR/JPY Daily Price CHART (Jan 14 – May 15, 2020) Zoomed in
Looking at the daily chart, on April 23 EUR/JPY resumed bearish price action creating lower highs with lower lows. This week, the market has tested twice the high end of the current trading zone 113.22 - 116.45 yet failed to rally to the higher zone. Additionally, the pair closed on Tuesday below the 50-day moving average generating a bearish signal.
Hence, the price could fall towards the low end of the aforementioned trading zone. A further close below that level could send EURJPY even lower towards 111.14. That being said, the weekly support area and levels marked on the chart (zoomed in) should be considered.
On the flip-side, any close above the high end of the zone could start a bullish sentiment and possibly push EURJPY towards 118.46. A further close above that level may extend the rally towards 119.63. In that scenario, the daily and weekly resistance area and levels underscored on the chat should be kept in focus.
EUR/JPY Four Hour Price CHART (April 3 – May 15, 2020)
From the four hour chart, on April 15 EUR/JPY violated the uptrend line originated from the April 2 low at 116.35. Today, the price tests another uptrend line originated from the May 6 low at 114.43. Any violation of this line would be considered a bearish signal.
A break below 114.43 would be considered an additional bearish signal and could send EURJPY towards 113.72. Nonetheless, the weekly support level underlined on the chart should be watched closely. In turn, any break in the other direction i.e. above 117.07 might trigger a rally towards 118.23. Yet, the weekly resistance level printed on the chart should be monitored.
Written By: Mahmoud Alkudsi, Market Analyst
Please feel free to contact me on Twitter: @Malkudsi
