Hello traders! During the past few days EUR/JPY has corrected up quite sharply, the price went from 115.32 up to 118.18, producing nearly 300 pips growth. We’ve applied the Fibonacci retracement level, to the previous impulsive price drop which shows that 50% Fibs was broken and acted as the resistance back on April 9. Right now, EUR/JPY has reached 38.2% Fibs at 118.18, which has been rejected clearly. Along with the Fibonacci retracement level, the price has rejected the upper trendline of the descending channel and 200 Exponential Moving Averages.
It makes 118.18 – 118.75 a very strong resistance area, and as long as price remains below this zone, EUR/JPY long term downtrend will remain valid. The current price could be very attractive for sellers due to the rejection of multiple resistance indicators, and this is the reason why price could start to move down once again.
Based on the previous level of support, EUR/JPY should be expected to re-test 115.32 – 115.54 area at the very least. If price will manage to break this support, a stronger decline can be expected. In this case, EUR/JPY might be heading towards the middle or the lower trendline of the extended descending channel. The bottom line, the lowest downside target could be near 361.8% at 110.80.
Bias: Strongly bearish while below 118.75
Potential Resistance Zone: 118.18 – 118.75
Potential Targets: 115.55, 113.72, 110.80
Have a profitable trading!