Hi Traders! EURJPY forecast follow up and update is here. On September 16th I shared this Technical Analysis – EURJPY Forecast post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
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Now let’s summarize the idea first:
On the daily chart, we had a bearish divergence and the price which was moving lower has broken below the uptrend line. And, based on the Parabolic Sar the dots are above the price, we may consider these as evidences of bearish pressure. In addition to this, the ADX indicator gave a bearish signal at the cross of -DI (red line) versus +DI (green line), and the main signal line (silver line) reads value over 25, we may consider this as yet another evidence of bearish pressure.
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
We also had a head and shoulders pattern that has formed and a valid breakout below the neckline of this pattern would be a good sign for further continuation lower. So based on all this, my view here is bearish and I expect the price to continue lower further”.
EURJPY D1(Daily) Chart Current Scenario
So based on the above-mentioned analysis, my view was bearish here and I was expecting the price to continue lower further after the head and shoulders pattern neckline breakout. The price action followed my analysis, it broke below the neckline, and then it moved further lower exactly as I expected it to, delivering 180+ pips move so far.
You can see this move clearly on the H4 chart below:
On the H4 chart, the market provided us with various facts supporting the bearish view. After the neckline breakout of the head and shoulders pattern, the price moved higher and retested the breakout. We then had an engulfing candle pattern that has formed, we may consider these as facts provided by the market supporting the bearish view. The price then moved lower further exactly as per my plan. Currently, on the H4 chart, we have a bullish divergence that has formed, this is something that we need to pay attention to. So if you are still involved in the sells then this is a good place to consider managing your trade and secure your profits (cash out or partial cash out or trailing protections or partial hedge, etc.. depending on the strategy that you work with).
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As traders we always have two choices, the first one is to fall in love with our analysis and try to convince the market and expect the price to move in the direction as per our wish. The second one is to follow the facts that the market provides us and make the right actions according to that. As you know the first option won’t help us and as you can see in the example above what happened when we followed the facts that the market hinted us and took the right action according to that.
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To your success,
Vladimir Ribakov
Certified Financial Technician
