TA of the Day: EUR/JPY Near Major Support. Will the Bullish Trend Hold?

The EUR/JPY The currency pair, which has been one of the best performing pairs for bulls since the beginning of the year, is now facing a major challenge. 😨

With the price approaching the edge of an important dynamic support level, the question now is: will the bulls continue their attack, or are we about to see a shift in the trend direction?

You’ve taken this challenge five times this year and succeeded every time, can you succeed the sixth time?

you welcome in Teaching Assistant of the Day (TAOTD)! 👋

Here is the daily chart:

📈 Technical analysis of the EUR/JPY pair on the daily chart

Using the technical analysis concepts we covered in our Forex course, let’s analyze the EUR/JPY currency pair.

Simple Moving Averages (SMA):

• 10 period simple moving average: It is located at the level of 172.00. The current price is less This level indicates short-term bearish momentum. The slope is downindicating short-term weakness.
• 50 period simple moving average:Centered around the 170.88 level. The price is currently around this level, indicating a potential support or resistance area in the medium term. The slope is To the topindicating strength in the medium term.
• 200 period simple moving averageIt is located at 163.83. The price is: above This level indicates long-term bullish momentum. The slope is to the topindicating a continuation of the long-term upward trend.

If you are new to moving averages, read Pipsology School’s lessons on how to use moving averages.

Relative position of moving averages:

• the 10 period simple moving average currently less the 50 period simple moving averageindicating a recent short-term downtrend.
• the 50 period simple moving average He is above the 200 period simple moving averageindicating that the medium-term trend is bullish.
• The 10 period simple moving average He is above the 200 period simple moving averagereinforcing the overall long-term uptrend despite recent short-term weakness.

Random oscillator:

• random oscillatorThe current reading is 6.92, indicating that the market is in Oversold This indicates that the price may soon face support and may be about to bounce.

If you are new to Stochastic, read our Pipsology School lessons on how to use Stochastic.

🕵️ Key Notes

Price movement:

• UptrendThe price has been in an upward trend since late 2023, featuring higher highs and higher lows.
• revisionRecently, the price has corrected from its peak at around 175.42 and is currently trying to find support.

Support and resistance levels:

• SupportsImmediate support is found at the 170.880 level (50-period simple moving average) and the 170.00 level, which is in line with the recent declines.
• resistanceImmediate resistance is located at 172.00 (10-period simple moving average).

If you are new to support and resistance, read our Pipsology School lessons on how to use support and resistance levels.

Moving averages:

• The 10-period simple moving average is currently acting as resistance, while the 50-period simple moving average is acting as potential support.
• ⚠️ 50-period simple moving average: The price has tested this moving average five times this year and five times, He was able to hold up as a support.

Random:

• The presence of the Stochastic indicator in the oversold zone indicates a possible bounce or price consolidation.

Market structure, market composition:

• Recent swing highs and lowsThe chart shows a low around 167.51 on June 13 and a high around 175.42 on July 11, followed by a recent low around 170.00.
• break the frameThere was a significant price drop above the previous resistance level at 170.00 in late June, indicating a continuation of the uptrend and strengthening bullish momentum.
• Change personality (chouch)A ChoCh will be observed if the price drops below the recent swing low at 167.51, indicating a potential shift in trend direction (from bullish to bearish).

🤔 Possible trade scenarios

He is EUR/JPY Buy or Sell?

The following trading scenarios are provided for educational purposes only. Since they do not include full risk management practices, they are not intended to serve as actual trading recommendations, but rather as food for thought to help you generate your own trading idea.

Long bias:

• Point of ConsiderationConsider entering a long position if the price finds support near 170.00 and shows signs of a bounce, such as a bullish candlestick pattern or positive divergence on the stochastic indicator. Additionally, a break above the resistance level at 172.00 could signal a continuation of the uptrend.
• Point of cancellationPlace a stop loss below the support level at 169,000 to manage the risk.
• potential targetWe expect a move towards 174.00 and above if the uptrend resumes.

Short bias:

• Point of ConsiderationConsider entering a sell trade if the price fails to break the resistance level at 172.002 and shows signs of bearish momentum, such as a strong bearish candlestick pattern.
• Point of cancellation:Place a stop loss above the recent high at 173.00 to manage risk. This level is crucial as a break above it would invalidate the bearish setup.
• potential targetThe initial target could be the support level at 170.000. If the downward momentum continues, expect further decline towards 168.00 or lower.

📝 TAOTD Summary

• directionThe long-term trend appears to be up with a series of higher highs and higher lows, but the short-term trend is showing some weakness around the 10-period simple moving average.
• Main levelsSupport at 170.00 and resistance at 172.00.
• PaidThe presence of the Stochastic indicator in the oversold zone indicates a possible bounce or price consolidation.
• market structure, market compositionThe latest Bank of England indicator points to a continuation of the upward trend,
• Moving average analysisThe downward slope on the 10-period SMA indicates short-term bearish momentum, while the upward slope on the 50-period and 200-period SMAs reinforces medium- and long-term bullish trends. The relative position of the moving averages shows that while there is a medium- and long-term bullish trend, it may be necessary to overcome short-term resistance to achieve further gains.