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 – 122.09
Although the single currency staged a brief bounce to 121.84 earlier this week, renewed selling interest quickly emerged there and the pair has dropped quite sharply again, dampening our bullishness and suggesting the rebound from 118.24 has ended at 122.89 last week, bring further fall to 119.00 but still reckon 118.80 would limit downside and price should stay well above said support at 118.24, bring another rebound later. Only a drop below said support at 118.24 would signal the erratic decline from 124.10 top has resumed and bring subsequent fall to 117.90-00, then 117.40-50.
On the upside, whilst initial recovery to 120.00-10 cannot be ruled out, reckon upside would be limited to the Kijun-Sen (now at 120.57) and bring another decline later. A daily close above the Tenkan-Sen (now at 121.20) would defer and risk rebound to the upper Kumo (now at 121.72) but only break of said resistance at 121.84 would revive bullishness and signal the fall from 122.89 has ended instead, bring further gain to 122.50, then retest of said resistance at 122.89. Looking ahead, a break there is needed to signal the rise from 118.24 low has resumed and extend further gain to resistance at 123.31, a daily close above this level would suggest the entire fall from 124.10 top has ended at 118.24 back in Feb and bring further subsequent headway towards this level.
Recommendation: Stand aside in the meantime.
On the weekly chart, despite rising to 122.89 earlier this month, the subsequent retreat formed two consecutive black candlesticks, suggesting the rebound from 118.24 has ended there and downside risk remains for weakness to 119.00 but said support at 118.24 should remain intact, bring further choppy trading. In the event euro drops below 118.24 level, this 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 to the Kijun-Sen (now at 118.09) is likely but a weekly close below there is needed to signal the rise from 109.49 has ended, bring further decline to 117.30-35, however, previous resistance at 116.29 should contain downside due to near term oversold condition, bring rebound later.
On the upside, expect recovery to be limited to 120.00-10 and the Tenkan-Sen (now at 120.78) should hold from here, bring another decline later. Only above said resistance at 121.84 would suggest the pullback from 122.89 has ended instead, bring another test of this level, break there would signal the rebound from 118.24 is still in progress and may extend gain to indicated key resistance at 123.31. Looking ahead, a break above this level is needed to retain bullishness and 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.
