EUR/JPY Price Analysis: Weekly W-formaiton is a compelling bearish play
|- EUR/JPY bears on the lookout for a downside opportunity below current support.,
- The daily W-formation is invalidated by recent bullish continuation, but weekly's is not.
Further to the prior analysis, EUR/JPY perking up again, looking to 128.00 resistance, the price has rallied too far for the prospects of a full retracement back to the daily W-formation's neckline.
Instead, however, a correction to at least a 38.2% Fibonacci retracement would be expected, if not to a 50% mean reversion which currently aligns with a prior resistance and a pivot level as well as te weekly W-formation's neckline.
The following illustrates such bearish prospects in a top-down analysis.
Prior analysis
128.12 was a line in the sand as a -61.8% Fibonacci retracement of the prior bearish leg of the W-formation, and considering the bullish extension to fresh highs of 128.45, its is an impulse too far.
Monthly chart
There is room for more upside according to a confluence of a -61.8% and 38.2% Fibonacci retracement of the prior correction vs the current bullish impulse.
The price has broken resistance and would be expected to continue higher.
Weekly chart
While the daily W-formation is far too overextended, the weekly is not.
A 50% mean reversion to structure could be on the cards.
This would need to be managed on the 4-hour time frame as follows:
Bears will be prudent to wait for the support structure to be tested, broken and retested where it would be expected to act as resistance.
There is a patch of liquidity on the way as eclipsed on the above chart as the only opposing candle in the rising sea of green.
Other than that, it is a clear path towards the target from there onwards.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.