Chart of the week – EUR/JPY
Bearish elements sighted in EUR/JPY ahead of ECB & BOJ
Short-term technical analysis
- 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).
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