Technical Sentiment: Bearish
Key Takeaways
Since 142.46 was reached, EUR/JPY longs have stopped pushing for new highs. After failing to capitalize from overall positive Euro news on Tuesday, traders were quick to sell today’s disappointing German Factory Orders (-2.8%) and French Industrial Production (-0.7%) reports. Having cleared stops below 141.25, the pair has a technical bearish bias until the ECB Press Conference on Thursday.
Technical Analysis
Albeit volatility has been greatly reduced in the last few weeks, EUR/JPY has thus far respected all boundaries and technical patterns, without wild stop hunts or nonsensical whipsaws.
Since last week the pair failed to print fresh highs within April’s bullish channel, leading to the formation of a small triangle. At the time of this writing, EUR/JPY is attempting to break both the triangle and the bullish channel. The most recent Higher Low, priced at 141.27, has already been invalidated as price broke below the 50, 100 and 200 Simple Moving Averages on the 4H timeframe.
The pair has to stabilize and close below the 141.26 (100-Day Moving Average) for 140.00 to be a valid target. A rally above 141.50, within the triangle/bullish channel, will reduce the chances of a deeper bearish continuation.
In the current market conditions, chart pattern traders should pay less attention to the long term triangle formation and instead focus on 140 and 143.50 boundaries of the inner range developing since March.
*********
Prepared by Alexandru Z., Chief Currency Strategist at Capital Trust Markets