EUR/JPY Turned To The Downside

EUR/JPY Turned To The Downside

EUR/JPY is traded lower at 123.86 level, versus 124.47 today’s high. The pair has rebounded in the short term but it seems that the upside movement is over and EUR/JPY could drop deeper again.

Euro has taken a hit from the Euro-zone ZEW Economic Sentiment which has dropped from 73.9 to 52.3 points. The German ZEW Economic Sentiment and the German Final CPI have disappointed as well, so the EUR/JPY drop is natural.

  • EUR/JPY Bearish Engulfing Signals Deeper Drop

EUR/JPY failed to stabilize above the Pivot Point (124.34) level signaling that the sellers could take the lead again. Yesterday’s bearish engulfing followed by today’s drop signals a deeper drop in the short term.

The pair could extend the current sell-off if it stays below the PP (124.34) and below the minor red uptrend line. The breakdown from the Rising Wedge pattern suggested a broader corrective phase. 

  • EUR/JPY Aggressive Breakdown!

The pair has escaped from the minor up channel, that’s why we could think that the price could approach and reach new lows. EUR/JPY has retested the Pivot Point (124.42) level before dropping towards 123.80 today’s low.

Stochastic has indicated a bearish divergence lately. A valid breakdown below the S1 (123.76) could really validate further decline.

Conclusion

The sharp drop from the Pivot Point (124.42) suggests selling on the H4 chart. A new lower low, drop below 123.84 and below the S1 (123.76) will validate a deeper drop as well. The S2 (122.60) and the S3 (121.94) are seen as downside targets.

The bearish scenario could be invalidated only by another higher high, bullish closure above 125.08 level.

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Author : Olimpiu Tuns

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