Here’s an update on our EUR/JPY short trade (sold at 127.80, stop at 127.70) as last updated here. EUR/JPY’s decline resumed after recovery was limited at 127.09 and reached as low as 125.16 so far. Near term development stays bearish with the prior recovery limited by falling 4 hour 55 EMA.
From the daily chart point of view, daily MACD stays negative and is trending down, indicating continuing downside momentum. So, overall, the bearishness remains in EUR/JPY and it should be targeting 124.08/89 key support zone.
Ideally, we should see further downside accelerate through 124.08. That should confirm that fall from 137.49 is itself a medium term down trend rather than a correction. And in that case, the cross should target 61.8% retracement of 109.03 to 137.49 at 119.90 and possibly below.
However, loss of momentum ahead would probably keep 124.08 intact to bring rebound. The momentum of the current down move will be closely watched.
We’ll hold short and lower the stop to 127.10, slightly above 127.09 resistance. Target is put at 120.00 first, slightly above 119.90 fibonacci level. But we’ll see the reaction from 124.08 to decide whether to exit earlier.
