EUR/JPY Candlesticks and Ichimoku Analysis

Weekly

• Last Candlesticks pattern: Hammer
• Time of formation: 19 Sep 2016
• Trend bias: Down

Daily

• Last Candlesticks pattern: Hammer
• Time of formation: 9 Nov 2016
• Trend bias: Near term up
  


EUR/JPY – 121.60




The single currency found renewed buying interest at 120.02 earlier this week and has rallied again, the breach of previous resistance at 121.35 confirms the rise from 118.24 low is still in progress and may extend further gain to 122.00 and then 122.50-55 but price should falter well below resistance at 123.31, bring retreat later. Looking ahead, only a daily close above resistance at 123.31 would signal the entire fall from 124.10 top has ended at 118.24 back in Feb and bring further subsequent rise towards this level which is likely to hold on first testing.

On the downside, whilst initial pullback to 121.00 cannot be ruled out, reckon 120.50 would limit downside and bring another upmove later. Only a daily close below said support at 120.02 would abort and suggest a temporary top is formed instead, risk weakness to 119.50-60 and possibly 119.00, however, still reckon 118.80 would limit downside and price should stay well above said support at 118.24, bring another rebound later. 

Recommendation: Buy at 120.80 for 122.80 with stop below 119.80.

On the weekly chart, the single currency has edged higher again after forming a long white candlestick last week, adding credence to our view that low has been formed at 118.24 and consolidation with upside bias remains for further gain to indicated level at 122.52 but break there is needed to retain bullishness, bring test of key resistance at 123.31. Looking ahead, only above this level would signal recent rise from 109.49 low has resumed for retracement of early decline to 125.25-30 (50% Fibonacci retracement of 141.06-109.49), having said that, reckon resistance at 126.47 would cap upside and price should falter below resistance at 128.23, bring retreat later.

On the downside, expect pullback to be limited to the Tenkan-Sen (now at 120.99) and support at 120.02 (this week’s low) should hold, bring another rise to aforesaid upside targets. Below 120.02 would risk weakness to 119.30-35 but only a drop below 118.80 would suggest the rebound from 118.24 has ended, bring retest of this level, a break there would signal the retreat from 124.10 top is still in progress and near term downside bias remains for this move to bring retracement of recent upmove, hence weakness towards the Kijun-Sen (now at 118.09), however, a weekly close below there is needed to signal the rise from 109.49 has ended, bring further decline to 117.30-35 but previous resistance at 116.29 should contain downside due to near term oversold condition, bring rebound later.