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EURJPY below 50DMA once again

Market Analysis

EURJPY, H4

EURJPY has settled below 133.00, after reaching 133.23 on Friday. The pair has gained 1% over the last week, reflecting run of encouraging data out of the Eurozone. Data over the last week affirming that economic growth momentum continues to build in the Eurozone, along with hopes that a grand coalition government will form in Germany, have given the euro a prop. However despite that Eurozone has been seen conquered, existential political threats, EURJPY is one of the few Euro crosses that presentas EUR weakness. The drop back in EURJPY came as Asian stock markets closed lower, though a rebound in European equity markets after an early-session wobble has given the pair a prop.

However the intraday picture, presents a bearish view of EURJPY, with price action over the last week having attempted to break resistance at 133.30, and returning then lower to 50-Day MA. The intra-day bearish technical indicators reveal that there is still space for further downside. In the 4-hour chart, Stochastic turned below 80, RSI at sloping down, while MACD lines turned above neutral on Friday but are sloping quite weak so there is no clear direction on that indicator. The 200-period MA is flat,  while 50-period MA is negatively aligned. Nevertheless, the pair seems to be in the process of forming a Head and Shoulders pattern in the 4-hour chart.

In a bigger picture, the Daily price action is in consolidation mode since late September, bouncing between mid 134s and mid 131s. The momentum indicators are reconfigured neutrally, with  Stochastic at 45, RSI at 51 and MACD lines at neutral since November 9. The market does not present a clear Daily picture for the particular pair, however a break above the recent top at 134.00, could propel EURJPY higher to 136.00.

Inversely a break below 131.00 – 131.50, which would also mean the completion of a Head and shoulders formation with neckline at 131.50, could suggest a retest of the 23.6% Fibonacci retracement level of the uptrend since April, at 128.50 – 129.00 area.

In the near-term, a short position was taken, which was triggered on the break of 200-period MA in the 4-hour chart, at 132.64. Support was set at 133.30 and a single Target at 132.00.

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Andria Pichidi

Market Analyst

HotForex

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