EURJPY Weekly Technical Outlook
Market on the EURJPY began a southward mode in July 2008. Following a downward swing from the high of July 2008 to the low of July 2012, price action retraced northward toward the 78.6 Fib area but turned around at the the 149.760 by December 2014. See attached monthly chart 1.
From the 149.760 area, the market restored the southward mode. On the monthly time frame, price action has made a similar retracement; the downward swing from the high of December 2014 to the low of June 2016 has witnessed a northward retracement to near the 78.6 Fib zone, around the 137.490 area, in February 2018. See attached monthly chart 2. After price action printed a strong bearish candlestick, an engulfing type, for a southward disposition in February 2018, bulls attempted a northward pushback in March 2018 but failed to take price action far. Price action in April 2018 is presently heading northward but bears are resisting. It is currently located in a horizontal resistance zone around the 132.850 area. As it is apparent that price action is lacking in northward momentum, we may see bears effect a southward turnaround soon.
On the weekly time frame, price action has moved away from a major ascending trendline (red) and is respecting an inner ascending trendline (black) which is operating as support. Last week, price action printed a rather weak bulish candlestick (with wicks on both ends). Bears asserted pressure to hinder the attempt of buls to take price beyond the horizontal resistance around the 132.850 area. As the order flow context since February has been largely influenced by bears, we may see them push price action southward, ar least to retest the support trendline (black). Nevertheless, we should not be unmindful of a resistance trendline (magenta) that may be appealing to bulls before they submit to a southward turnaround. Such a bullish intent may see a northward breach of the immediate horizontal resistance around 132.850 and a retest of the horizontal resistance around the 134.250 area; an area that is in confluence with the 61.8 Fib zone of the most recent downward swing from the February 2018 high.
Price action on the daily time frame is now around a resistance zone. Although a shooting-star like candlestick was printed last week Friday, the technicals are still disposed northward. We may see a pullback southward into the mean or the support trendline (blue) before price action continues northward. However, there are a few resistance areas which bulls will have to contend with: the horizontal resistance around the 134.250 area and the resistance trendline (magenta) seen on the weekly time frame.
On the H4 time frame, price action is operating in an ascending wedge (blue). Giving the context of the major trend (looking left), there is likely to be a bearish turnaround after the corrective phase. The last three sessions last Friday printed three bearish candlesticks; but the order flow context is largely under the bulls. Besides, a micro support trendline (chocolate) is still in play. Nevertheless, there are a few barriers for bulls to scale: wedge resistance trendline, horizontal resistance (minor resistance around 133.180; major resistance around 134.250) and resistance trendline (magenta). On the other hand, should the micro support trendline (chocolate) be broken down by bears, they will have to contend with the minor horizontal support (dark orange) around the 131.795 area before heading for the wedge support trendline. A breakdown of the support trendline on at least a four-hourly basis, with a retest and zone flip, is likely to give the impetus for a bearish continuation.
I may be wrong. Trade safe and prosper.