The EURJPY currency pair on the 4-Hour Chart has been following an upward path since 19 August 2021, having found support at the 127.92 level. The formation of the Japanese candlestick reversal pattern known as Bullish Hammer signalled the very beginning of the upward bias.
The attractive price enticed bulls who entered the market with long positions and as a result they have pushed the EURJPY currency pair to higher levels, following a pattern of successively higher tops and higher bottoms.
Subsequently, the currency pair formed a Evening Star pattern near the resistance level of 130.736 which hinted at the end of the rally and the potential beginning of a decline.
Upon applying Technical analysis on the price chart, one can see that the last Japanese candlestick of Evening Star pattern managed to close below the 10-period Exponential Moving Average line, a fact that also points to the downward direction and the bearish bias in the market.
Additionally, the Relative Strength Index Oscillator registers values below the fifty line, which also confirms the negative sentiment in the market.
Both technical indicators, as well as the Japanese candlestick reversal pattern, are in agreement in terms of the pair’s downward bias.
Furthermore, the current price is trading below the upward trend line, which also implies that supply is greater than demand.
Applying the Fibonacci Retracement tool to the low price of the Bearish Japanese candlestick at the price of 130.165 and dragging it up to the high price of the pattern at the price of 130.687, three price targets were calculated:
- The first price target is estimated at 129.643 (200%)
- The second price target is seen at 129.121 (300%)
- The third price target is projected at 128.599 (400%)
Of course, it remains to be seen whether the crowd psychology as well as the bears’ pressure will manage to maintain the control of the market and push the EURJPY currency pair lower.
For more information, please visit: FXTM
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.
Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.