EURJPY Weekly Technical Outlook
The pair has been northbound since January. On the weekly time frame, after the bullish move between January and April, price action was sideways for most of May and June. Two weeks ago, a big bullish candlestick formed, which was shy of the immediate resistance zone around 130.270 by about 160 pips. A bullish candlestic formed last week as a follow-up and hit the resistance zone but could not breach it to the upside. Should price action breach the zone, it will have to contend with a barrier around 131.100/131.133 before it gets to a natural target of the immediate minor resistance around the 132.120 area.
On the daily time frame, price action is respecting an ascending channel (navy blue) formed by the support trendline from the low of April and the high of May. The most recent price action has moved distally towards the resistance trendline with a fair amount of momentum behind it and is around the 61.8 Fib zone of the drop from the high of June 2015 to the low of June 2016. As noted earlier, this move is likely to contend with a barrier around 131.100/131.133 before it gets to a natural target of the immediate minor resistance around the 132.120 area. By that time, price may be too far from the mean value area and a pullback to retest the support trendline may be initiated. However, should price action fail to pullback, the target is likely to be the major resistance zone around the 133.850 area, whch could offer a good opportunity for sellers to move price action southwards. That area will represent 76.4 Fib of the drop from the high of June 2015 to the low of June 2016 and could be seen as a technically natural area of overbought or extension, which is amenable to a turnaround of price action.
On the H4 time frame, price action has moved upwards from a major support trendline (navy colour), and within the ascending channel seen on the daily time frame, to respect an inner support/ascending trendline (magenta colour). The order flow context favours buyers. A flag pattern has formed (bound in saddle brown-coloured lines) which portends a bullish continuation, particularly should price action break out of the flag distally. Nevertheless, a retest of the inner trendline (magenta colour) is still possible; this may extend to target the immediate horizontal support around the 127.200 area, near the base of the origin of the flag.
I may be wrong. Trade safe and prosper.