EUR/JPY Considers Another Crack At The March Low

We previously outlined a technical argument for EUR/JPY to have already seen its high. And whilst there is still another seven and a half months to go, price action since then appears constructively bearish.

For the complete picture you can read the original post here but, in short, we noted bearish range expansion from the 137.49 high coupled with a lower high at 133.48 could mark the beginnings of a larger move down.

Since then, bearish momentum took price below the 131.25/39 support zone but fell short of testing the March low. It’s worth mentioning at this point that, despite a retracement higher from 129.22, a bearish wedge remains in play which could still hit its projected target around 128.93. And if bearish momentum retain control, we’re ultimately looking for a break beneath March’s low.

EURJPY 1 Day Chart

For now, we take comfort from price action this week which has seen a bearish hammer stall beneath a cluster of resistance; the 50% Fibonacci level, the August highs between 131.25/39 and the 20-day average. That we have also a subsequent close lower suggests bearish momentum is reverting in line with the higher timeframes and another attempt to crack the March lows could be fast approaching.

That said, a break above Monday’s high would make it less appealing over the near-term, as this also invalidates the resistance cluster. If bearish momentum is to persist then short trades on intraday timeframes would be preferred.

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