EUR/JPY just broke below the technical pattern!
If you haven’t noticed, a combination of risk aversion and a surge in yen strength has sent the major yen crosses lower in recent trading sessions.
In the case of EUR/JPY, all JPY buying translated into an extension of the bearish swing that started when the pair was rejected at the psychological handle of 151.00.
The pair is now trading near 149.50, which is below the 100 and 200 SMAs on the hourly time frame.
More importantly, it is also below the ascending channel pattern on the chart.
Are we looking forward to a bearish reversal in EUR/JPY?
EUR/JPY 1-hour trading chart Planned by TV
Current market topics refer to “bet”.
For one thing, what China’s PMI missed earlier today re-lights concerns about global growth now that the US appears to be in no danger of defaulting on its debt.
An unscheduled meeting of Japanese financial officials also spooked some JPY bears, prompting them to sell Yen crosses near the end of the month.
Finally, the Flash estimate of the Eurozone CPI Due tomorrow and expected to show slower price growth in May. A slower CPI will give the ECB less reason to raise interest rates further at its next meeting.
For now, I’m keeping close tabs on how EUR/JPY will react to S1 (149.42) of today’s standard pivot points.
The bounce from the level opens the possibility of a breakout and retest scenario near the pivot point (150.18) and the broken trend line support area.
But if EUR/JPY breaks the S1 support level, I would consider selling the market and taking profit near the 148.70 interest area if not the 148.00 psychological handle near the S2 area (148.08).
If I miss the break-down, I would also consider drawing trendline resistance from this week’s highs and jumping in on potential trendline retests.
What about you? Are you also in the “EUR/JPY reversal” camp?
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