Hello traders! On September 21 EUR/JPY tested the low at 122.51, while cleanly rejecting the average price downtrend trendline. At the same time, the price has reached and rejected the bottom of the extended descending channel. Today price has formed a double bottom near 122.51, which might suggest that the bottom has been reached.
As long as EUR/JPY daily closing prices remain above the 122.51, price is expected to correct to the upside. This could be a 200 pip move, considering that the key resistance is located at 124.63. This resistance level is confirmed by two Fibonacci retracement levels, namely 50%, and 88.6% Fibs as per the chart above. Besides, the Fibonacci cycles indicator shows that a new cycle is about to start, potentially with the next 4h candle.
The upside target could be tested as soon as October 8, which corresponds to the next Fibonacci cycles. And finally, the resistance goes in line with the extended 200 Exponential Moving Average as well as the second average-price downtrend trendline.
Bias: Bullish while daily closing prices remain above 122.51
Potential Support Zone: 122.50 – 122.75
Potential Targets: 124.60
Have a profitable trading!