EURJPY managed to hold above its recent low of 116.11 this week even though the 121.00 resistance area added some pressure.
The positive performance in the market, however, is not the only good news. More importantly, the pair seems to be forming a double bottom pattern around 116.00 in the weekly chart which could be a bullish signal that the sell-off that started from the 2018 peak of 137.49 may have reached a bottom and it is time for the pair to change direction. A bullish cross between the 50- and the 20-weekly simple moving averages (SMAs) could further encourage a change in direction – if completed in the coming sessions.
In technical indicators, the strengthening fast Stochastics are backing any potential improvement but the RSI and the MACD continue to lack direction near their neutral levels, keeping some caution in the market for now.
To convince traders over a trend reversal, the bulls need to dominate above the 122.86 neckline. Such a move would validate the double bottom formation and send the price towards the 200-weekly SMA, hitting the 38.2% Fibonacci of 124.27 of the 137.49-115.85 downleg too. Above the latter, the pair could gain fresh momentum outside the Ichimoku cloud to meet the 50% Fibonacci of 126.80.
On the flip side, if the 23.6% Fibonacci of 121.15 rejects any correction towards the neckline, the focus will shift back to the 116.00 bottom. Should the bears pierce that floor, and more worryingly close below the 2017 trough of 114.84, the door would open for the 2016 support zone of 112.30-110.80.
Summarizing, a positive double bottom pattern has been detected in the EURJPY weekly chart, though a confirmation of a trend reversal could only come above the 122.86 neckline.
Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
EUR/USD hovers around 1.0700 after German IFO data
EUR/USD stays in a consolidation phase at around 1.0700 in the European session on Wednesday. Upbeat IFO sentiment data from Germany helps the Euro hold its ground as market focus shifts to US Durable Goods Orders data.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold price trades with mild negative bias, manages to hold above $2,300 ahead of US data
Gold price (XAU/USD) edges lower during the early European session on Wednesday, albeit manages to hold its neck above the $2,300 mark and over a two-week low touched the previous day.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.