The EUR/JPY currency pair, on the H4 time-frame, was in a down trend until the 21st of June when a lower bottom was recorded at 120.952. Buyers found the price attractive and demand overcame supply.
A closer look revealed that the Momentum Oscillator displayed positive divergence between point a and b compared to the price at 121.066 and 120.952. This could have alerted technical traders to a possible reversal in the making.
After the bottom at 120.952 the market broke through the 15 and 34 Simple Moving Average, the Momentum Oscillator pierced the zero baseline into positive territory and there was a crossing of the 15 and 34 Simple Moving Averages, called a Golden Cross. All of these confirmed a possibility technical price reversal.
A possible critical resistance level formed when a higher top was recorded on the 24th of June at 122.470. Sellers tried to push the price lower but demand overwhelmed supply. A Hammer Candle formed on 25 June at 121.653, confirmed a likely support level and strengthened the possible reversal even further.
If the EUR/JPY breaks through the critical resistance level at 122.470, three possible price targets may be projected from there. Attaching the Fibonacci tool to the top of the possible reversal at 122.470 and dragging it to the support level at 121.653, the following targets may be calculated. The first target can be anticipated at 122.975 (161 %). The second price target can be predicted at 123.792 (261.8%) and the third and final target may be expected at 125.114 (423.6%).
If the bottom at 121.653 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.
A closer look revealed that the Momentum Oscillator displayed positive divergence between point a and b compared to the price at 121.066 and 120.952. This could have alerted technical traders to a possible reversal in the making.
After the bottom at 120.952 the market broke through the 15 and 34 Simple Moving Average, the Momentum Oscillator pierced the zero baseline into positive territory and there was a crossing of the 15 and 34 Simple Moving Averages, called a Golden Cross. All of these confirmed a possibility technical price reversal.
A possible critical resistance level formed when a higher top was recorded on the 24th of June at 122.470. Sellers tried to push the price lower but demand overwhelmed supply. A Hammer Candle formed on 25 June at 121.653, confirmed a likely support level and strengthened the possible reversal even further.
If the EUR/JPY breaks through the critical resistance level at 122.470, three possible price targets may be projected from there. Attaching the Fibonacci tool to the top of the possible reversal at 122.470 and dragging it to the support level at 121.653, the following targets may be calculated. The first target can be anticipated at 122.975 (161 %). The second price target can be predicted at 123.792 (261.8%) and the third and final target may be expected at 125.114 (423.6%).
If the bottom at 121.653 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.