EUR/JPY decision zone at 50% fib at 123.40

This article reviews the potential breakouts, wave patterns, and chart patterns.

Price Charts and Technical Analysis

The  EUR/JPY is testing the resistance trend lines and 21 ema zone: 

• A bullish breakout confirms the uptrend in wave 1 or 3 (purple).

• A deeper bearish pullback could indicate a wave 1-2 (purple).

A bullish break is expected to develop as follows:

• It could see a break, pullback and continuation pattern. 

• A bullish daily candlestick should confirm the bullish break. 

• This is valid as long as the bullish candle appears in about the next 5 trading days (the HMA 20 should remain above the 21 ema high).

A bearish pullback could see two variations:

• A test and bounce at the 144 ema for a wave 1-2 (purple).

• A bearish breakout (red dotted arrow) which invalidates (red circle) this wave pattern but not the entire uptrend because the 50% and 61.8% Fib remain support.

On the 4 hour chart, price action has reached the last support zone if the current pullback is a wave 4 (blue). A deeper bearish breakout (yellow circle) indicates a wave 1-2 pattern instead. A full break below the bottom (red circle) invalidates the bullish outlook.

However, if price action manages to: 

• Break above the 21 ema zone. 

• And break above the resistance trend line. 

• Then the EUR/JPY would confirm the development wave 5 to the upside.

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The analysis has been done with the ecs.SWAT method and ebook.