EUR/JPY looks set to resume potential impulsive down move

EUR/JPY bears are lurking round the corner below 117.70 resistance.

Short-term technical outlook on EUR/JPY

click to enlarge charts

Key Levels (1 to 3 days)

Intermediate resistance: 117.40

Pivot (key resistance): 117.70

Supports: 116.40/20 & 115.80/65

Next resistance: 118.50

Directional Bias (1 to 3 days)

After a trading range of 43 pips in the past 2 days since 03 Oct, the EUR/JPY cross pair is likely to resume its impulsive downleg sequence within a major downtrend phase in place since 01 Feb 2018 high of 136.96 to target the near-term supports at 116.40/20 and 115.80/65 in the first step as long as the 117.70 key short-term pivotal resistance is not surpassed.

However, a clearance with an hourly close above 117.70 invalidates the bearish scenario for another round of corrective rebound to retest the 24/27 Sep 2019 swing high at 118.50.

Key elements

  • Since its 03 Sep 2019 high of 119.82, EUR/JPY has been evolving within a minor descending channel with its upper boundary now acting as a resistance at 117.40.
  • The daily RSI oscillator is now testing a significant ascending support at the 40 level where a break below revives the momentum-term downside momentum.
  • The 117.70 key short-term resistance is defined by the former minor range support from 23 Sep/01 Oct 2019 and the 23.6% Fibonacci retracement of the on-going slide from 03 Sep high to 03 Oct 2019 low.
  • The 115.80/65 significant near-term support is defined by the 03 Sep 2019 swing low, the lower boundary of the minor descending channel and the 1.236 Fibonacci expansion of the slide from 03 Sep high to 23 Sep low projected from 27 Sep 2019 high.

Charts are from eSignal

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.