EUR/JPY considers another crack at the March low

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We previously outlined a technical argument for EUR/JPY to have already seen its high. And whilst there is still another seven and a half months to go, price action since then appears constructively bearish.

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For the complete picture you can read the original post here  but, in short, we noted bearish range expansion from the 137.49 high coupled with a lower high at 133.48 could mark the beginnings of a larger move down.

Since then, bearish momentum took price below the 131.25/39 support zone but fell short of testing the March low. It’s worth mentioning at this point that, despite a retracement higher from 129.22, a bearish wedge remains in play which could still hit its projected target around 128.93. And if bearish momentum retain control, we’re ultimately looking for a break beneath March’s low.

For now, we take comfort from price action this week which has seen a bearish hammer stall beneath a cluster of resistance; the 50% Fibonacci level, the August highs between 131.25/39 and the 20-day average. That we have also a subsequent close lower suggests bearish momentum is reverting in line with the higher timeframes and another attempt to crack the March lows could be fast approaching.

That said, a break above Monday’s high would make it less appealing over the near-term, as this also invalidates the resistance cluster. If bearish momentum is to persist then short trades on intraday timeframes would be preferred.

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