Created
: 2024.11.07
2024.11.07 23:51
EUR/JPY is still unwinding a consolidation phase within a short and medium-term uptrend. Given the technical analysis maxim that "the trend is your friend", however, the odds still favor an eventual continuation higher once this phase ends.
A break above 166.69 (October 31 high) would probably confirm such a continuation higher. Resistance at 167.96 (July 30 swing high) could provide an initial target and act as a barrier to further upside.
The minimum target for the breakout from the range, however, lies higher, at 169.68, the 61.8% Fibonacci extrapolation of the height of the range to the upside.
That said, there is a risk of a deeper pullback first, due to the open gap which lies just below price between 164.90 and 164.45 (red-shaded rectangle on chart). gaps have a tendency to be filled, according to technical analysis theory. If so, EUR/JPY may weaken initially and fall to the bottom of the open gap at 164.45, before perhaps recovering and resuming its dominant uptrend.
The Moving Average Convergence Divergence (MACD) momentum indicator has been falling during the unwiding of the consolidation phase and this decline in momentum without a corresponding fall in price is a sign of underlying weakness. It is another mild indication of the risk of possible near-term weakness materializing.
Created
: 2024.11.07
Last updated
: 2024.11.07
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