Weekly
• Last Candlesticks pattern: Hammer
• Time of formation: 19 Sep 2016
• Trend bias: Down
Daily
• Last Candlesticks pattern: Doji
• Time of formation: 28 Mar 2017
• Trend bias: Near term up
EUR/JPY – 117.65
As the single currency has remained under pressure after breaking support at 118.24, adding credence to our bearish view that recent erratic decline from 124.10 is still in progress and downside bias remains for this fall to extend weakness to 117.00-05 (61.8% Fibonacci retracement of 112.61-124.10), however, near term oversold condition should prevent sharp fall below 116.40-50 and reckon previous resistance at 116.29 (now support) would hold on first testing, risk from there is seen for a rebound to take place later.
On the upside, whilst initial recovery to 118.30-35 cannot be ruled out, reckon upside would be limited to the Tenkan-Sen (now at 118.88) and bring another decline later. A daily close above 119.00-05 would defer and risk a stronger rebound to 119.75-80 but resistance at 120.44 should remain intact, bring another decline later. Above the Kijun-Sen (now at 120.11) would abort and suggest low is formed instead, bring a stronger rebound to 120.44 resistance but a sustained breach above there is needed to provide confirmation, bring subsequent gain to the upper Kumo (now at 121.05).
Recommendation: Sell at 120.40 for 118.40 with stop above 121.40.
On the weekly chart, this week’s selloff below support at 118.24 adds credence to our view that top has been formed at 124.10 and consolidation with mild downside bias remains for the fall from there to bring retracement of recent upmove, hence weakness to 117.00 is likely but a weekly close below previous resistance at 116.29 (now support) is needed to signal the rebound from 109.49 has ended at 124.10, bring further fall to 115.50 and then 115.00, however, near term oversold condition should prevent sharp fall below 114.40-50 and support at 113.72 should remain intact, bring rebound later.
On the upside, expect recovery to be limited to 119.00-05 and the Tenkan-Sen (now at 120.11) should hold, bring another decline later. Only above resistance at 120.44 would suggest low is formed instead, bring a stronger rebound to 121.15-20 but resistance at 121.84 should remain intact, bring another decline later. A break of this resistance would suggest the pullback from 124.10 has ended, bring further gain towards resistance at 122.89 which is likely to hold from here.
