Yesterday’s article discussed the major currencies such as the GBPUSD, EURUSD and USDJPY. Today we swift the focus to the cross pairs – let’s start with the EURJPY.
The EURJPY uptrend came to abrupt halt at the end of 2013. The subsequent weeks of trading saw plenty of bearish pressures unfold. The initial yearly low has been set at 136.20, which was posted at the beginning of February. Price bounced off of a daily support trend line (magenta) and ever since then price has been on the rise. Let’s zoom in to this part of the price action.
When reviewing the price action of the daily chart in 2014, it becomes clear that [tweetable alt=””]EURJPY has managed to break above 2 resistances (orange and purple). The 2nd break in fact happened yesterday. [/tweetable] An entire daily candle closed above the consolidation zone as well (marked in blue lines).
Although there was some selling pressure at the end of the day (wick on top of yesterday’s daily candle), there is a decent chance of a momentum break to the upside. Either a break of yesterday’s high and/or a bounce off of yesterday’s low are the crucial lines in the sand to confirm a bullish breakout. Other parameters are:
1) A stop loss below the bottom (139.95) would be the technical stop loss.
2) The take profit is the initial year high at 145.70. A break above that high and top would mean a target at the -27.2% (149.67).
What is your analysis communicating to you regarding the EURJPY? Let us know down below!
The Australian interest rate stayed at the same level at 2.5%. This seemingly had a bearish price action consequence for the Aussie. The EURAUD for instance posted bullish engulfing twins upon the release of the news. But how does this candle stick fit within the bigger market structure?
On the 4 hour chart a down trend is certainly present. Not only is there a clear downtrend channel (green) but also the DTT trend indicator (2nd from the bottom) is showing red. The daily chart, however, is now fully aligned as yet (grey color) due to the major uptrend that took place in parts of 2013 and 2014 obviously.
Most recently price bounced off of the -27.2% Fibonacci target (blue) after a respect for the 61.8% Fibonacci retracement. The 2 most likely scenarios are these:
1) A corrective chart pattern and a subsequent break out to the downside towards the next Fib target at 61.8%.
2) A stronger correction back up after which the broken bottom and top of the down trend channel could become resistance spots for more downside as well.
A break above the downtrend channel changes the dynamics and a bigger retracement is possible (green) before hitting a next resistance level. Only after a confirmed higher low (2 candles closed to the right) would a start of an uptrend be back in scope.
What is your view on the EURAUD? Do you see a bigger bounce occuring at this -27.2% target? Let us know down below in the comments section of this page.
Thank you for sharing this article and wish you Happy Trading and many pips!
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