The EUR/JPY currency pair, on the H4 time-frame, was in an upward trend until the 2nd of December when a higher top was recorded at 121.017. Supply overwhelmed demand and the upward move was annulled.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 120.595 and 121.017. This could have alerted technical traders to a possible technical reversal or early stage of a new trend.
After the high at 121.017, the price broke through the 15 and 34 Simple Moving Averages, the Momentum Oscillator broke through the zero baseline into bearish terrain and a Strong Bearish Candle formed. This further confirmed a possible technical price.
A possible critical support level fashioned when a lower bottom was recorded at 120.096 on the 4th of December. Buyers tried to push the market higher but a possible resistance level formed on the same day at 120.537 that could not be breached and more sellers seem to be entering the market.
If the EUR/JPY breaks through the critical support level at 120.096, then three possible price targets can be projected from there. Attaching the Fibonacci tool to the lower bottom at 120.096 and dragging it to the possible resistance level at 120.537, the following targets might be calculated. The first target can be anticipated at 119.824 (161 %). The second price target may be predicted at 119.384 (261.8%) and the third and final target might be expected at 118.671 (423.6%).
If the resistance level at 120.537 is broken, the scenario is invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the EUR/JPY currency pair on the H4 time-frame will remain bearish.
Disclaimer:
This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point a and b compared to the price at 120.595 and 121.017. This could have alerted technical traders to a possible technical reversal or early stage of a new trend.
After the high at 121.017, the price broke through the 15 and 34 Simple Moving Averages, the Momentum Oscillator broke through the zero baseline into bearish terrain and a Strong Bearish Candle formed. This further confirmed a possible technical price.
A possible critical support level fashioned when a lower bottom was recorded at 120.096 on the 4th of December. Buyers tried to push the market higher but a possible resistance level formed on the same day at 120.537 that could not be breached and more sellers seem to be entering the market.
If the EUR/JPY breaks through the critical support level at 120.096, then three possible price targets can be projected from there. Attaching the Fibonacci tool to the lower bottom at 120.096 and dragging it to the possible resistance level at 120.537, the following targets might be calculated. The first target can be anticipated at 119.824 (161 %). The second price target may be predicted at 119.384 (261.8%) and the third and final target might be expected at 118.671 (423.6%).
If the resistance level at 120.537 is broken, the scenario is invalidated and will need to be re-evaluated.
As long as sellers maintain a negative sentiment and supply overcomes demand, the outlook for the EUR/JPY currency pair on the H4 time-frame will remain bearish.
Disclaimer:
This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.