- EUR/JPY is on fire from a 4-hour perspective.
- Daily support is compelling from a weekly supply zone perspective.
The cross has rallied from a low of 126.88 to a high of 127.47 on the day so far, extending the 2021 breakout in what will be a fourth consecutive bullish close if the bulls close on top on Thursday.
However, the price is meeting a weekly resistance zone and is expected to correct back to support structure according to the overextended W-formation on the daily time frame.
The following is a topdown analysis that illustrates the market structure, support and resistances and expectations according to a Fibonacci retracement analysis.
Monthly chart
-637456391727980235.png)
The monthly chart is bullish with the price already rallying from a 38.2% Fibo retracement level where the W-formation was completed on the correction to the chart pattern's neckline and confluent support level.
Weekly chart
-637456393025782664.png)
The bulls are very much in control considering the that weekly chart's momentum and strong bullish impulse which did not encounter much in the way of contention from the bears.
Daily chart
-637456394690981605.png)
However, the price is now running into a deeper supply zone from where it would be expected to struggle with bearish commitments.
The following chart shows the weekly resistance:
-637456395732187768.png)
4-hour chart
-637456396213365060.png)
With all that being said, and while a pullback is expected to occur, it is a matter of timing.
At this juncture, the bulls remain in control according to the 4-hour time frame with MACD above zero and the price breaking through the London highs and away from the 10 moving average.
The price needs to break below the old resistance that can now be considered as support.
At that stage, there is a higher probability that the daily support will draw in the bearish commitments from weekly resistance.
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