EUR/JPY Price Analysis: Mixed market structure, bears waiting to pounce
- EUR/JPY bears are lurking seeking an entry on the 4-hour time frame.
- Bulls will be back in control on a break of weekly resistance.
EUR/JPY is stalling on the longer-term northerly trajectory and is hamstrung below bearish structure on the weekly and 4-hour charts.
The following is a top-down analysis that offers a bearish bias from a swing trading perspective that requires the 4-hour chart's bullish trend to develop a little further into resistance so that a higher probability set-up could emerge.
Monthly chart
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The price is stalling within the monthly impulse that was bourne from a correction to prior highs.
The price would be expected to move higher, eventually, but there is a bearish structure on the lower time frames.
Weekly chart
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The weekly chart shows the price has respected the rules of the W-formations in two instances, W-1 and W-2.
On both occasions, the price pulled back to the necklines of both patterns. Expectations would be for an upside continuation from this juncture.
However, there is a bearish bias with the price trapped below resistance and considering the bearish engulfing candlestick.
Daily chart
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On the daily chart, the price is trapped between support and resistance, but there is a bearish bias while below the 21-moving average and resistance.
4-hour chart
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From a 4-hour perspective, the price could yet extend higher to the 21-DMA/resistance before gravity kicks in and subsequently hamstrings the market back to test the neckline of what would be a W-formation.
Bears could capitalise on the prospects from the resistance zone and target the neckline's confluence with the Fibonacci retracement levels for a high probability setup.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
