Chart of the week – EUR/JPY
Chart of the week – Potential bullish reversal on sight for EUR/JPY as ECB & BOJ looms
Short-term technical analysis (1 to 3 weeks)(click to enlarge chart)
Time-stamped: 17 Jul 2022 at 12:00pm SGT
Source: CMC Markets
- Both the European central bank (ECB) and Bank of Japan (BOJ) will hold their respective monetary policy decision meetings on the same day on Thursday, 21 July.
- Integrated technical analysis (graphical, momentum, Elliot Wave/fractals) suggests that the recent four weeks decline of 738 pips seen in the EUR/JPY from the 8 June 2022 high to the 8 July 2022 low of 136.87 may have reached an inflection zone that is likely to kickstart a short-term recovery process.
- Watch the 136.70 key medium-term pivotal support for a potential short-term bullish reversal towards 141.50 followed by 144.25/60 (8 June/22 June/28 Jun 202) swing highs. Clearance with a 4-hour close above 144.60 reinforces a further potential up move towards the next resistance at 148.30/149.10.
- However, a break with a 4-hour close below 136.70 invalidates the bullish reversal scenario for an extension of the corrective decline towards the next support at 133.90/132.90 (12 May 2022 swing low that confluences with the former 20 October 2021/10 February 2022 swing highs).
- Positive elements; recent price actions have staged a rebound of 300+ pips from its 8 July 2022 low of 136.70 to its recent 15 July 2022 high of 139.88 and the rebound has taken shape right at the 61.8% Fibonacci retracement of the prior up move from 12 May 2022 low to 8 June 2022 high, surpassed above the 50-period moving average that has capped previous rebounds since 5 July 2022 and the 4-hour RSI oscillator has staged a bullish breakout above key corresponding resistance at the 50% level after it hit its oversold region on 6 July 2022.
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.