EUR/JPY – Technical Analysis

Looking at the Euro versus the Yen, price has pulled back significantly since printing the post crisis high of 127.07 on September 1st. Below is a top down analysis of this pair starting on the daily chart.

DAILY TIME FRAME

On the chart above, we can see a fib plotted from the start of the most recent bullish drive to the most recent high, price has come 10 pips short of the 61.8. We can also see by looking at the candlesticks that price has begun to slow down around this level and if this significant fib level can hold as support, we can expect a move to the upside but if price breaks below, I would look at the next fib level to offer support. A bullish engulfing candle closure on this time frame, however, would offer further confluence.

4 HOUR TIME FRAME

On the 4-hour chart above, we can see that at market open we had a push below the parallel channel drawn with the current candle driving price back above the channel.

1 HOUR TIME FRAME

On the hourly chart, we can see that price is looking to break structure. If the current candle can close above 122.840 that would confirm a break of structure to the upside. Using the fib tool, I would then wait for a retracement into the horizontal ray which illustrates a potential inverse head and shoulder pattern and also lines up with the parallel channel which has been acting as dynamic support since September 21st.

With the Brexit deadline two and half weeks away, chief negotiators on both sides – Lord Frost for the UK and Michael Barnier for the EU – are set to oversee this week’s Brexit discussions before the formal meeting takes place on Friday. Failure to reach a deal by the deadline would result in the UK and EU adopting World Trade Organization (WTO) rules instead of having a free trade agreement which is what the UK are hoping for. Under the WTO rules, tariffs would be applied to most goods which UK businesses send to the EU, making UK goods more expensive and harder to sell in Europe, vice versa.

Remember to always stick to your trading plan and always use the correct risk management. Subscribe to receive updates sent directly to your e-mail.

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