Daily Price Action
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EURJPY: Two Requirements for a Bearish Scenario

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Important: I use New York close charts so that each 24-hour period closes at 5 pm EST.

Click here to get access to the same charts I use.

EURJPY bulls have made their presence known since the pair bounced from the 127.00 support area last month. So far, the market has clawed back 350 of the 650 pips lost between late September and October.

Could that be a clue?

Note that the 350 pip figure above is close to the 50% retracement of the recent 650 pip decline. As you may know, corrections love to retrace about 50% of impulsive moves.

The question is, was the late September to October selloff impulsive? In other words, do EURJPY bears have intentions of taking the market lower, or is this just more back and forth price action within an 800-pip range?

At the moment, I have to side with the idea that the price action since late September is part of a range and nothing more. The aggressiveness of this latest bounce doesn’t give me much reason to believe the pair is about to roll over again.

But there are two sides to every story.

While buyers are no doubt in control at the moment, there is a pattern that could help us determine a likely turning point.

As you know, I’m a big fan of the daily time frame. It’s why I named the site “Daily” Price Action. But every once in a while, the 4-hour chart can really shine. This may be one of those moments.

Since bouncing from 127.00 in October, EURJPY has carved what appears to be a 4-hour ascending channel. So far we have two touches on both support and resistance, so everything looks good there.

The question is, will this channel serve as a continuation pattern?

That’s what we need to find out. And the only way to do that is to wait and see. Attempting to short EURJPY up here is risky in my opinion given how bullish the pair has looked since October 26th.

I will say this though. For a pattern to trigger a continuation of a recent move, the market shouldn’t retrace much more than 50% of the initial move. If it does, chances are it isn’t a continuation pattern.

In the case of EURJPY, that means the 130.00 area needs to hold as resistance on a daily closing basis. A close above this area would signal to me that buyers intend to retest 131.00 and perhaps even tag the September high at 133.00.

If your charts look different from mine, it’s because you aren’t using New York close charts. You can go here to get access to the same platform I use.

In summary, I’d like to see the 130.00 area hold up as new resistance. If it does and we get a close below the channel support shown below, it could set up a short opportunity for a move back to the 127.00 handle.

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EURJPY 4-hour ascending channel

Leave a Comment:

27 comments
Olu says

You are a genius

Reply
    Justin Bennett says

    Not quite, but I appreciate the compliment. This stuff is too simple to require the mind of a genius.

    Reply
Surfer says

I just recently cashed up on this pair, and I’ve been clueless where to next, thanks for clarity… You’re the best🙌

Reply
    Justin Bennett says

    Cheers. We should have an idea of where it wants to go soon enough.

    Reply
Joseph says

Thank you Justin for another analysis that you did. This opened my mind about the knowledge on how to see things in different timeframes as well as the Fibonacci retracement. Do you use it for a recent move like in this pair so that you can see the possible next reversal? Also, I hate to say but I missed this pair. I went for a 50% retracement of the pinbar just above 129 and unfortunately, it was not hit and since then I was just watching it sell off. But as you said, there will always be other opportunities to come.

Reply
    Justin Bennett says

    I use Fibonacci to identify the 50% retrace (which is not technically a Fibonacci sequence, but it works all the same).

    I also use it to confirm key levels. You can learn more here:

    https://dailypriceaction.com/free-forex-trading-lessons/fibonacci-retracement-levels-price-action

    Reply
      Joseph says

      Thank you for the link. I’ve seen this on your site and it really enlightened me on how to use it. It’s just a matter of mastering it. I also use it to see if my Support and resistance are in the right place.

      Reply
        Justin Bennett says

        You’re welcome.

        Reply
Desmond says

The 130.00 resistance level held. It left to be seen if the 127.00 support level will hold as well. Keep it up

Reply
    Justin Bennett says

    It’s holding (for now). Cheers.

    Reply
Azeem says

Hi Justin,

Thx for that. One question

Is it in making of Head and shoulder in the daily chart?

Reply
    Justin Bennett says

    You’re welcome. No, not that I see.

    Reply
Colin de Ste Croix says

Wish i saw this 5 hours ago. (-: Gbp/Jpy also looks like its at rest??

Reply
    Justin Bennett says

    GBPJPY is a little different. More on it later.

    Reply
Pierre Mifsud says

But on the daily I am spotting a H & S pattern currently the formation of the right shoulder potentially down to 125 handle….Can you see it?

Reply
    Justin Bennett says

    Hi Pierre, that isn’t a head and shoulders pattern. For starters, the structure doesn’t stand out from the price action directly to the left of it.

    See here:

    https://dailypriceaction.com/free-forex-trading-lessons/head-and-shoulders-pattern

    Reply
      PIERRE MIFSUD says

      i do not understand how you cannot see it ……it started on the 16 th August 2018 from the left bottom and now the second half of the shoulder is down-trending. Where can I send you the chart?….Final target is 125

      Reply
        Justin Bennett says

        I see what you’re referring to, Pierre. That isn’t the issue. What I’m saying is that it isn’t a head and shoulders in my book.

        Reply
Pon Akilan S says

Hi Justin,

Now the candle has closed below the channel support. Should we wait for reversal retest to channel support again or we can enter to sell nw?

Reply
    Justin Bennett says

    That’s for you to decide.

    Reply
Segoman says

This year end will mark an interesting one in my trading field. I have blown thousands of dollars but now have massive knowledge about the market cycle. You have taught me a lot, you gave me the Holy grail the champagne and caviar of forex. Since i’ve been following you I don’t need no mentors, webinars that I lost thousands on anymore. God bless you man.

Reply
    Justin Bennett says

    That’s great to hear! Glad you’re starting to see the light. 🙂

    Reply
Nelson says

“The question is, was the late September to October selloff impulsive? In other words, do EURJPY bears have intentions of taking the market lower, or is this just more back and forth price action within an 800-pip range?” Looking at my Fibo, the uptrend from 15th of August low to 21st Sept high retraced to about 78% which is considered shallow. Then looking at the High of 21st September to 26th October low gives exact 50% retracement at about 130.00 handle. Looking at the bearish price action at the current price area, Ei will favor the bears.

Reply
    Justin Bennett says

    Great, thanks for sharing!

    Reply
Nelson says

Meanwhile the extended channel support is broken already.

Reply
Olorunsola Tolu says

There are great traders here. I will wait for reversal on 4hrs and wait for PA. Good weekend all

Reply
    Justin Bennett says

    Enjoy your weekend.

    Reply
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