EUR/JPY 1D Chart: Channel Down

Source: Dukascopy Bank SA
© Dukascopy Bank SA
For the time being the outlook on EUR/JPY is bearish, while the main question is whether the pair will keep forming the channel or the trading range will narrow and the falling wedge will eventually emerge. One of the arguments in favour of the latter option is the fact that the price has recently failed to extend a correction to the upper edge of the channel through a cluster of resistances at 134.50 (200-day SMA, monthly R2 and down-trend) and turned around. Also because of the sentiment in the market (66% of positions are long), the price is now likely to fall down to 129 yen before we see a new significant recovery. In the meantime, a dive through the support trend-line will expose the April low at 126.
© Dukascopy Bank SA
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