Chart of the day - EUR/JPY minor uptrend at inflection zone with bearish elements as ECB & BOJ looms

Bearish elements sighted in EUR/JPY ahead of ECB & BOJ

Short-term technical outlook on EUR/JPY (Thurs 14 Jun)



Key technical elements

  • Since our previous “Chart of the day” report dated on 07 Jun 2018, the EUR/JPY cross pair had staged the expected up move within its minor uptrend and it is coming close to the intermediate resistance/target of 131.10/35.
  • The on-going minor uptrend in place since 30 May 2018 low of 124.59 is now right below a key inflection zone of 130.60/131.35 which is defined by a confluence of elements. Firstly,  the medium-term descending channel resistance (depicted in pink) from 02 Feb 2018 high. Secondly, the minor range resistance from 14 May/22 May 2018 that led to a recent steep decline to print the 30 May 2018 low of 124.59. Thirdly, a Fibonacci retracement/projection cluster (see daily & hourly charts).
  • Bullish exhaustion signs have emerged where the EUR/JPY has traced out a minor bearish “Ascending Wedge” configuration in place since 08 June 2018 minor swing low with its upper boundary that coincides with 130.60 and lower boundary acting as a minor support at 129.90. In addition, the hourly RSI oscillator has flashed a bearish divergence signal close to its overbought zone. These observations suggest that recent upside momentum of price action has started to wane.
  • The next significant short-term support rests at 129.45 (minor swing low areas of 11/13 Jun 2018) and 127.90/50 zone (50%/61.8% Fibonacci retracement of the on-going minor uptrend from 30 May 2018 low to yesterday, 13 Jun U.S. session high of 130.35 & minor congestion area from 31 May/05 Jun 2018.

Key Levels (1 to 3 days)

Intermediate resistance: 130.60

Pivot (key resistance): 131.35

Supports: 129.90 (trigger), 129.45, 127.90 & 127.50

Next resistance: 133.10

Conclusion

Therefore as long as the 130.60 short-term pivotal resistance is not surpassed and an hourly close below 129.90, the EUR/JPY may shape a decline towards the next intermediate supports at 129.45 follow by 127.90 in the first step.

On the other hand, a clearance above 131.35 shall invalidate the medium-term downtrend in place since 02 Feb 2018 for a further recovery to target the next resistance at 133.10 (the swing high area of 25 Apr 2018 & close to the 61.8% Fibonacci retracement of the medium-term downtrend from 05 Feb 2018 high to 30 May 2018 low).

Charts are from eSignal



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