FxWirePro: EUR/JPY breaks channel line support to reach 3 years lows - drag upto 120.403 is on cards

After clearing significant supports at 127.619 and 126.101, yesterday the pair has broken channel support at 124.466 and now continuing with yesterday's losses at current levels of 124.011 which is 3-years lows. we don't think any other substantiation is needed for the trend continuation after cracking down channel support.

Apart from this EUR/JPY is boiling up with lots of other bearish indications. It is understood that previous Gravestone Doji and candle resembling a shooting star on monthly charts have evidenced their bearish effects and still have more downside potential in the future.

So, traders must wait and see the next downward price movements. In a downtrend, if a big real body bearish candle forms after the shooting star and hanging man pattern at a support level (see monthly chart) it is absurdity to even think over bullish view, instead it could be deemed as an exit point.

It's advisable to use a combination of patterns and indicators to determine your trading strategy.

Thus, while these bearish patterns were coupled with leading and lagging indicators, it still signals more downside potential upto 120.403 levels where it may test next strong supports.

Currently, RSI (14) trending below oversold areas, even then downward convergence with these dipping prices signifies the momentum of this selling pressure.

Although the there is no sign of either overbought or oversold situation on stochastic curve, it alarms bears trying to take over the declining rallies as the slow stochastic noises with %D line cross over below 20 levels (current %D line flashes at 14.0287).

On the other hand, both lagging indicators (MACD , 21DMA & 7DMA) still signal downtrend continuation, both on daily and monthly 21DMA crossing over 7DMA indicates the ongoing declining prices to prevail further.