EUR/JPY Price Forecast: Downtrend likely to resume after correction finishes

EUR/JPY is pulling back within a short-term downtrend.
The correction will probably run out of steam and prices fall again, targeting the August 5 lows.

Joaquin Monfort FXStreet

EUR/JPY has been trending lower since rolling over at the August 16 highs.

The mainly declining sequence of peaks and troughs indicates EUR/JPY has established a short-term downtrend, which according to technical analysis theory favors more downside in line with that trend.

EUR/JPY 4-hour Chart

Over the last few periods the pair has recovered after touching a new low of 157.47 on Friday. Given the overarching downtrend, this recovery is probably just a counter-trend correction which will eventually run out of steam, allowing bears to continue pushing prices lower.

Although there is no sign the pullback has finished, if it does and price breaks below the 157.47 lows, that would confirm an extension of the downtrend, with the next target lying at the 154.44 – the August 5 lows. A break below that would be an even more bearish sign and suggest a probable reversal of the long-term uptrend too.

Author

Joaquin Monfort

FXStreet

Joaquin Monfort is a financial writer and analyst with over 10 years experience writing about financial markets and alt data. He holds a degree in Anthropology from London University and a Diploma in Technical analysis.

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