Daily outlook - EUR/JPY climbs to 129.46
- An early hours of Monday’s trading session revealed that the EUR/JPY currency pair has successfully used an upside moment that was created by a release of data on the US CPI last Friday to surge not only to the 129.46 level, but climb even a little bit higher.
- In theory, the pair has a chance to gain a foothold at the monthly PP at 129.78.
- However, three red candles in a row combined with the CCI and RSI technical indicators suggest that the pair has reached already its maximum and now will start to decline.
- If this assumption is true, then the minor overstep beyond the above 129.46 mark simply represents a bearish fakey pattern.
- This scenario is, generally, supported by the market sentiment, as 68% of traders continue to hold short positions on this currency pair.
Comment:
EUR/JPY passes 129.78
As it was expected, the EUR/JPY currency rate has successfully bypass a combined resistance level formed by the 200-hour SMA and the monthly PP at 129.78, thus continuing to move in an ascending channel.
The next target for the currency rate will be the weekly R1, which is located at the 130.64 level. Given that the southern side is now protected by the 55- and 200-hour SMAs as well as the above monthly PP, the downfall of the rate seems unlikely.
In support of this assumption, a summary of various technical indicators for the upcoming 1H, 5H and 1D timeframes sends a strong buy signal. Moreover, the average market sentiment is 72% bearish, which means that the pair most likely is going to continue to move to the top.
As it was expected, the EUR/JPY currency rate has successfully bypass a combined resistance level formed by the 200-hour SMA and the monthly PP at 129.78, thus continuing to move in an ascending channel.
The next target for the currency rate will be the weekly R1, which is located at the 130.64 level. Given that the southern side is now protected by the 55- and 200-hour SMAs as well as the above monthly PP, the downfall of the rate seems unlikely.
In support of this assumption, a summary of various technical indicators for the upcoming 1H, 5H and 1D timeframes sends a strong buy signal. Moreover, the average market sentiment is 72% bearish, which means that the pair most likely is going to continue to move to the top.
In the short-term, an idea expressed yesterday was correct. The currency exchange rate, indeed, started to slip to the bottom and this downside movement could continue, if the pair had not met the 100-hour SMA near 129.04. This technical indicator appeared to be strong enough to force the Euro to start advancing against the Yen once again.
If today the currency pair will manage to bypass a combination of the 200-hour SMA and the monthly PP at 129.78, this will confirm an existence of a short-term ascending channel. Simultaneously, this will confirm that the March 2016 high at 128.18 was a turning point for the then-downtrend.
Most probably, in the upcoming days the currency rate is going to try to soar to the 131.31 level, which represents a point, from which it started to fall two weeks ago.