EUR/JPY Maintains Bearish Direction

By: Doug Rosen

I start my analysis on this pair looking at the USD/JPY and I am observing that the USD/JPY appears quite bearish on all time frames. On the weekly it is riding the 5 ema downward, on the daily the 21 ema seems to have been in control the 4 hour 5 ema is sharply crossing below the other ema's as well as with the hourly and 15 minute so the USD/JPY is no doubt bearish which means we have a strong JPY and a weak USD. In my EUR/USD analysis I state that the EUR/USD is bearish, but, could be facing a possible retracement which may cause temporary USD weakness, which adds to the USD weakness against the USD/JPY but also means that the JPY will be strong and the EUR will be strong so I am not sure if I would want to trade this pair just yet. I do not want to trade two currencies that are both strong. If the EUR/USD maintained its bearish trajectory this would mean a weak EUR then I would consider pairing a weak EUR with a strong JPY considering the USD/JPY would continue bearish then I would look to short the EUR/JPY. On the weekly chart this pairs looks just as bearish as always, price is riding the 5 ema, lower Bollinger Band is open and pointing down as it has been for the last few weeks. On the daily the same conditions appear and the correlation between the EUR/JPY and the EUR/USD is very strong and both pairs look very similar technically speaking. On the daily we riding the 5 yet within the Bands but against the lower band and an oversold stochastics and a gapped from the daily 5 ema retracement is imminent.

EUR/JPY Daily Analysis

Looking at the 4 hour chart same bearish appearance but we are gapped from the 5 ema as well with stochastics rising out of the oversold zone and the 4 hour chart seems to be against visual support which just happens to also be last week's low and the hourly stochastics is in the oversold zone. If last weeks low is broken we will probably get a steep drop down since the lower hourly Bollinger Band is wide open and pointing down and the hourly 5 ema is laying heavy on price. Price has already busted the Friday low and the 15 minute 5 ema is crossing below the Friday low forcing price down further and the lower 15 minute Bollinger Band is open and pointing down sharply.

EUR/JPY 4 Hour Chart

So, I would watch for JPY strength against the USD and watch for USD strength against the EUR to consider a short and wait for pullbacks on this pair before entering a short. Maybe consider shorting this pair when price touches the hourly 5 ema as well as a pullback tolat weeks or Fridays low since that seems to overlap with the hourly 5 since this ema seems to be in control of price.

EUR/JPY 1 Hour Chart