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I discussed the EURJPY in Saturday’s Forex forecast video.
The key takeaway from that analysis was the ascending channel that extends from the 2019 low that developed last September.
It’s the same channel I pointed out on January 6th.
Here’s the EURJPY segment of Saturday’s video:
Notice how the EURJPY struggled at the 122.60 resistance area this week.
However, the future direction for the risk-sensitive pair hinges on what lies just below today’s price.
At the moment, ascending channel support comes in near the 121.00 handle.
Why is that significant?
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It’s significant because the ascending channel below (second chart) has directed the short-term uptrend that began last September.
The broader trend for EURJPY is also still pointed lower.
That’s evident by the descending channel since the February 2018 high.
Here’s a view from the weekly time frame:
Given the combination of the smaller ascending channel within the longer-term downtrend, an eventual break lower does seem likely.
Of course, we can’t rule out the bullish scenario entirely, especially while the EURJPY is above ascending channel support on a daily closing basis.
The “daily closing basis” refers to the 5 pm EST close when using New York close Forex charts. These charts give you five 24-hour sessions each week.
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But just like I mentioned in yesterday’s CADJPY video, I’m only interested in shorts given the longer-term downtrend here.
A close below channel support near 121.00 would expose 119.20 and perhaps the 2019 low at 116.20.
Alternatively, a push higher would likely encounter resistance in the 122.60 area, followed by the descending channel top near 123.80.