X

Select the account you'd like to open

FX Analysis

Chart of the week – Bearish elements sighted in EUR/JPY ahead of ECB & BOJ

Chart of the week – EUR/JPY 

Bearish elements sighted in EUR/JPY ahead of ECB & BOJ 

Short-term technical analysis

Time stamped: 24 Oct 2021 at 5:00pm SGT (click to enlarge chart) Source: CMC Markets

 

  • ECB and BOJ will announce their respective latest monetary policy decision on Thursday, 28 October. Thus, it will be insightful we examine the latest trend bias and key technical elements of the EUR/JPY cross pair.
  • The current medium-term uptrend phase of EUR/JPY in place since 22 September 2021 low of 127.92 has recorded an accumulated rally of +555 pips but it seems to have hit a “roadblock” in middle of last week with several bullish exhaustion signals.
  • Since its recent 20 October high of 133.48, its price actions have started to ich downwards and such decline occurred right after a retest on a major range resistance of 133.50 in place since April 2018 and ended last week with a weekly bearish “Shooting Star” candlestick pattern.
  • In addition, the 4-hour RSI oscillator has shaped a prior bearish divergence signal at its overbought region and continues to exhibit potential short-term downside momentum since the bearish breakdown of its corresponding ascending support on 21 October.
  • If the 133.50 key medium-term pivotal resistance is not surpassed to the upside, EUR/JPY may continue its short-term corrective decline sequence towards the 130.90/70 support zone (former swing high area of 3 September & 50% Fibonacci retracement of the recent up move from 6 October 2021 low to 20 October 2021 high) before another potential impulsive up move sequence materialises to resume its medium-term uptrend phase.
  • On the other hand, a 4-hour close above 133.50 invalidates the short-term bearish outlook for an extension of the rally towards the next resistance at 135.00/135.45 (a cluster of Fibonacci expansion levels).

 


Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

Sign up for market update emails