The EUR/JPY currency pair, on the H4 time-frame, was in a down trend until the 25th of July when a lower bottom was recorded at 120.052. Demand overwhelmed supply and the downward momentum was annulled.
A closer look revealed that the Momentum Oscillator displayed positive divergence between point a and b compared to the price at 120.207 and 120.052. This could have alerted technical traders to a possible reversal in the progress.
After the bottom at 120.052 the market broke through the 15 and 34 Simple Moving Average, the Momentum Oscillator broke the zero baseline into positive territory, there was a crossing of the 15 and 34 Simple Moving Averages, called a Golden Cross and an Engulfing Candle formed after the lower bottom. All of these confirmed a possibility technical price reversal.
A possible critical resistance level formed when a higher top was recorded later in the session on the 25th of July at 121.382. Sellers are currently trying to push the price lower but if demand overcome supply and the AUD/USD breaks through the critical resistance level at 121.382, three possible price targets may be projected from there.
Attaching the Fibonacci tool to the top of the possible reversal at 121.382 and dragging it to a possible support level near the 34 Simple Moving Average at 120.741, the following targets may be calculated. The first target can be anticipated at 121.779 (161 %). The second price target can be predicted at 122.421 (261.8%) and the third and final target may be expected at 123.459 (423.6%).
If the support level at 120.741 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 120.207 and 120.052. This could have alerted technical traders to a possible reversal in the progress.
After the bottom at 120.052 the market broke through the 15 and 34 Simple Moving Average, the Momentum Oscillator broke the zero baseline into positive territory, there was a crossing of the 15 and 34 Simple Moving Averages, called a Golden Cross and an Engulfing Candle formed after the lower bottom. All of these confirmed a possibility technical price reversal.
A possible critical resistance level formed when a higher top was recorded later in the session on the 25th of July at 121.382. Sellers are currently trying to push the price lower but if demand overcome supply and the AUD/USD breaks through the critical resistance level at 121.382, three possible price targets may be projected from there.
Attaching the Fibonacci tool to the top of the possible reversal at 121.382 and dragging it to a possible support level near the 34 Simple Moving Average at 120.741, the following targets may be calculated. The first target can be anticipated at 121.779 (161 %). The second price target can be predicted at 122.421 (261.8%) and the third and final target may be expected at 123.459 (423.6%).
If the support level at 120.741 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.