EUR/JPY Price Analysis: Head-and-shoulders chart pattern emerges, targets the 143.00 area
- EUR/JPY breaks below the two-week support trendline, confirming a head-and-shoulders chart pattern.
- The pair faces multiple support levels to target 143.20, including 50-day EMA at 146.00 and 100-day EMA at 144.59.
- Reclaiming 147.00 could open the door for gains and negate the bearish chart pattern, with the next resistance at 147.80-148.00.
EUR/JPY confirms a break below a two-week support trendline, which also ensures the formation of a head-and-shoulders chart pattern that targets a drop of 450 pips toward 143.20, 50 pips shy of piercing the 200-day Exponential Moving Average (EMA) at 142.70. However, it should be said that it would need to hurdle support levels on its way south. As the Asian session begins, the EUR/JPY is trading at 146.85, down by 0.01%, after losing 0.46% on Thursday.
EUR/JPY Price Analysis: Technical outlook
Given the backdrop, the GBP/JPY confirmed the formation of a head-and-shoulders chart pattern. Even though it is a bearish chart pattern, sellers must reclaim several demand areas on its way toward the 143.00 figure.
The EUR/JPY first support would be the 50-day Exponential Moving Average (EMA) at 146.00. A breach of the latter would sponsor a fall to the 100-day EMA at 144.59 before testing the 144.00 psychological level. Once cleared, the head-and-shoulders profit target of 143.20 should be reached.
The Relative Strength Index (RSI) indicator turned bearish, warranting that further downside is expected, while the 3-day Rate of Change (RoC), continues to slide below its neutral level.
Conversely, if EUR/JPY buyers reclaim 147.00, that could open the door for further gains. The next supply area to test would be the head-and-shoulders neckline at around 147.80-148.00, before reaching towards the last year’s high of 148.40, negating the bearish chart pattern.
Trend: Downward biased.
EUR/JPY Price Action – Daily Chart
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
