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.
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