FxWirePro: EUR/JPY hits fresh 5-month lows, lingering to break crucial support upon bearish WMA crossover, major bear trend in handle formation to inverse saucer

The flurry of bearish streaks of EURJPY has now hit fresh lows of 118.0800 levels (while articulating).

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

Please note that current prices have again slid below 7 and 21DMA levels on last Friday’s candle, where we see the current prices have broken below strong support at 121.0887 levels.

Previous upswings were 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 robustness after BoJ statement and Eurozone PMIs.

For more details on our index please visit below weblink:

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.