European Union Foreign Exchange

EUR/JPY advances inside Ichimoku cloud; descending channel holds

EUR/JPY is trading higher in the 4-hour chart after it posted a bullish cross within the 20- and 40-simple moving averages (SMAs).

The RSI indicator is pointing to the upside in the bullish area, while the MACD oscillator is trying to strengthen its momentum above the trigger line. Currently, the pair remains within the Ichimoku cloud as the red Tenkan-sen line and the blue Kijun-sen line are signaling flat movement in price action.

However, if the market continues the upside movement in the near term, the pair could touch the upper band of the Ichimoku cloud around 125.30 and the 23.6% Fibonacci retracement level of the upleg from 118.57 to 127.50, near 125.37. In case of a higher extension, the price could challenge the 126.15 hurdle taken from the highs on March 22, penetrating the descending channel to the upside.

eur/jpy forex 03042019

In the alternative scenario, if the market pushes the pair lower, the price could rest near the immediate support of 125.00. More declines could also meet the 20-SMA and then the 40-SMA currently at 124.70 and 124.55 respectively. An aggressive run below these lines could open the door for the 38.2% Fibonacci of 124.10.

In the longer timeframe, EUR/JPY remains in a bearish channel following the pullback on two-and-a-half-month high of 127.50, and only an advance above this level could bring the bullish outlook back into play.

by Melina Deltas, XM Investment Research Desk

Melina joined XM in December 2017 as an Investment Analyst in the Research department. She can clearly communicate market action, particularly technical and chart pattern setups. Her technically focused method looks mainly at price action across multiple time frames to capture big moves that develop over the years. She has more than 3 years of experience in analyzing financial markets, specializing in forex, indices, and commodities.

Melina studied Pure Mathematics at Lancaster University and has a Master’s Degree in Monetary and Financial Economics from the University of Cyprus. Currently, she is an associate member of the Society of Technical Analysts (STA) and a Certified Financial Technician (CFTe).

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