FXTM

EUR/JPY H4 – Sellers might be losing momentum

OANDA:EURJPY   Euro / Japanese Yen
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The EUR/JPY currency pair, on the H4 chart, was in a downtrend until the 9th of May when a lower bottom was recorded at 122.489. Demand overwhelmed supply and buyers started to find the price attractive.

A closer look revealed that the Momentum Oscillator displayed positive divergence between point a and b compared to the price at 123.374 and 122.489. This could have alerted technical traders to a possible technical reversal.

After the bottom at 122.489, the market broke through the 15 and 34 Simple Moving Averages with the Momentum Oscillator breaking the zero baseline, both further strengthening the possible change in direction.

Sellers then dragged the market lower but a higher bottom formed at 122.534 on the 13th of May. Soon after demand again overcome supply and a possible critical resistance level formed when a top was recorded at 123.406 on the 14th of May. Currently the bears are applying selling pressure again and it seems that might be some indecision in the market.

If the bulls manage to overpower the bears and the EUR/JPY breaks through the critical resistance level at 123.406, three possible price targets may be projected from there. Attaching the Fibonacci tool to the top of the possible reversal at 123.406 and dragging it to the bottom of the last pullback at 122.534, the following targets may be calculated. The first target can be anticipated at 123.945 (161 %). The second price target can be predicted at 124.817 (261.8%) and the third and final target may be expected at 126.228 (423.6%).

If the bottom at 122.534 is broken, the possible scenario is invalidated and will need to be re-evaluated.

As long as buyers maintain a positive sentiment and demand overcomes supply, the outlook for the EUR/JPY currency pair on the H4 time-frame will remain bullish .
Order cancelled: The bottom at 122.534 was broken and the trade was cancelled.
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