The higher timeframes suggest we could see a retracement phase forming on EURJPY.
If that is the case how can we take advantage and where will the retracement end?
Watch the video to find out more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, Head Currency Analyst.
In this video, we’re going to take a look at EUR/JPY because there could be a potential replacement forming.
Weekly time frame
If we take a look at EUR/JPY on this weekly time frame, we can see that the market is making higher highs and higher lows where the price recently topped out, around the 130.50 area.
Typically, in trending environments, we want to be buying back at previous supporting areas, which is down here. It starts off around 127, where the previous structure highs are.
In theory, we would be looking for the price to come back down to this point We’d be looking for the trend to continue at the most traded level, which is around the 126.28 area.
If the price will potentially go down to this point, how do we trade this? If we know that the weekly could form this retracement phase, then we should see a downtrend starting to form on our lower time frames.
Four-hour time frame
If I go down to the four-hour timeframe, we can see that the price is starting to make lower lows and lower highs with this recent breakout. I would like to see the price to pull back and continue the weekly retracement phase.
Looking at the market, we identified this potential resistance level. The market has found some resistance and support recently, around 129.66.
So, if the price can be pushed back towards this 129.66 level, this would be the most ideal area to start looking for short positions on EUR/JPY. What we’ll be looking for is the price to start forming some bullish daily candlesticks.
We want to start seeing a little bit of a slowdown in that momentum. If we do get some bearish candlesticks forming, then we can look for the break of the retracement phase for those first targets down at 127, and see if it can continue down to 126.28.
If we bring in the strength meter, we can see that the EUR and JP Yen are in similar areas. EUR has started to break lower, while the JP Yen is beginning to break higher.
However, now that we’ve seen the price form this lower low on the daily time frame and on the four-hour time frame, where it looks clearer, it shows to me that the EUR is still losing strength, but the JP Yen could be gaining strength.
That suggests that this could be a good trend trading opportunity here, and we could see the price come back down at this 127 level.
So, keep an eye on EUR/JPY. It looks like we’re going to see some short opportunities coming up. Look for the breaks of trends to the downside.
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