EUR/JPY: Important technical signal
|EUR/JPY is sliding lower ever since the Bank of Japan (BoJ) intervened in late October. These moves are slow but surely form a possible reversal.
EUR/JPY analyzed
The last candle indicates that the currency pair is trying to break from the current pattern downward. However, it’s important to wait for a confirmation on lower timeframes and another weekly candle. If this scenario plays out, EUR/JPY may be headed in the pink area, which is a potential 800 pip move.
Now, daily timeframe is the most important one. The daily candle seems to be closing a pin bar, but the trend line has been broken. This looks like a clear sell signal, yet the confirmation on a lower timeframe is needed.
After months of being in an uptrend, EUR/JPY is moving lower, breaking a crucial level at approximately 144. The weakening dollar helps the Japanese yen and other fiat currencies to gain strength and this move could continue at least until the end of the year.
A little pullback upward will create a solid sell signal, where approximately 200 pips should be sufficient as a stoploss. On the other hand, takeprofit might be larger than that by at least a double. Thus, EUR/JPY is offering a sell trade opportunity with a risk-reward-ratio (RRR) of minimum 1:2.
Conclusion
Do not forget this is only a technical perspective on charts, so fundamental events like Fed’s rate hike in the middle of December may bring extraordinary volatility. More importantly, wait for the confirmation before entering because it’s okay to miss a trade. The next one will come for sure.
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