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Fan Yang

EUR/JPY - Double Top Holding; Price at the Crossroad

After a double top in mid-August, the EUR/JPY slid to 132.22 by early September. Then, there was a v-shape reversal that has brought price back to the 137.00 area. Here, EUR/JPY retreated, showing respect to the double top formed in August.

EUR/JPY 4H Chart 9/15
(click to enlarge)

EUR/JPY is now at the crossroad. The bullish mode in September has been neutralized after price retreated from around 137. This resistance from the double top gives the EUR/JPY bit of a bearish bias.

However, the 4H RSI is still above 40, which suggests that the September bullish momentum is still in play. Perhaps, we will get another test of the 137.00 area - perhaps, further proof of resistance will give more confidence to bears in this market. Then, a break below 135.00 should open up a bearish outlook at least back down to the 132.22 low. 

If the RSI holds above 40, and price breaks above 136.00, let's look for that test of 137.00. Now if price breaks above 137.00, there is a pivot around 138, but the outlook would open up the August high around 139.00. 

To be honest, the bearish bias I speak of also comes from the daily chart. 

EUR/JPY Daily Chart 9/15

(click to enlarge)

Th daily chat shows that EUR/JPY has been neutralized and slightly bearish since June after a double top under 141. Note that the August double top essentially respected the June double top putting EUR/JPY into a bearish mode, albeit a very choppy one. This week's respect of 137.00 could be the start of another pause and dip as the pair has been doing since June. In the bearish outlook, we should limit he bearish outlook to 130 for the most aggressive target, while 131.00 might be a more reasonable one