FxWirePro: EUR/JPY bears maintain 5-month lows in major bear trend – More slumps on cards as handle formation extends to adjoin inverse saucer

As stated in our previous write up, EURJPY bearish trend remains intact. The flurry of bearish streaks of this pair has now hit fresh lows of 117.0400 levels (while articulating).

The pair is forming handle formation adjoining inverse saucer in the major downtrend.

Please be noted that the current prices have been well below 7 and 21SMA levels on the weekly chart, where we see the current prices have broken below strong supports at 123.1715 and at 121.0887 levels.

The previous upswings have now been absolutely exhausted after failure swings at the resistance of 123.1715 levels, more slumps likely as current price slid below 7DMA and on bearish DMA crossover. Consequently, for today the bears again managed to drag the slumps.

On a broader perspective, after inverse saucer on EURJPY signals weakness of the major trend. For now, adjoining handle pattern is now on cards as interim bulls seem to be absolutely exhausted below 21EMAs (refer monthly charts). 

As stated in our recent technical write up on this pair, rallies have extended upto 120.8326 levels or 21-EMA on monthly plotting. As a result, the bear swings seem to be gaining selling interest at this juncture that is where attempts of price drops are considerable.

Subsequently, on weekly and monthly plotting, RSI (14) has been converging below 52 levels (while articulating) to the declines that signal the strength in downtrend, while stochastic curves are also (at 50 levels) evidencing %D crossover that signal strong selling momentum but this has been little indecisive on monthly terms although bearish biasedness is seen at this level.

Thus, leading indicators on weekly terms signal intensified selling momentum, while MACD with bearish crossover indicates the extension of price declines.

Thereby, the 6 months of consolidation phase now seems to be deceptive and extension of dips seems most likely as lagging oscillators have been indecisive but slightly in bears favor.

FxWirePro currency strength index that measures the price performance of a basket of currencies on hourly basis indicates the weakness of euro and Yen’s neutral sentiments after upbeat prints of Japanese current account and machinery order numbers.

For more details on our index please visit below web link:

http://www.fxwirepro.com/fxwire/currencyindex

Trading tips:

Contemplating above technical reasoning, on hedging grounds we advocate shorting futures contract of mid-month or near month expiries to arrest potential slumps upto 113.6590 and 112.500 levels also cannot be ruled out upon breach of the 1st target.