Hi Traders! EURJPY forecast update and follow up is here. On November 3rd I shared this “EURJPY Forecast And Technical Analysis” post in our 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!
My Idea
On the H4 chart, based on the Heikin Ashi candles we can see that currently, we have strong bullish bodies here as well in upward moving market conditions so it basically reflects a bullish environment. Also, the price which was moving lower has created a bullish divergence that has formed between the first low that has formed at 132.257 and the second low that has formed at 131.474 based on the MACD indicator which we may consider as evidence of bullish pressure. We also had two strong resistance zones that has formed and the price which was moving higher has broken above these zones and is holding above them. After the breakout these strong resistance zones are acting as two strong support zones for us. Until both these strong support zones shown in the image below hold my view remains bullish here. If we get a valid breakout above the most recent downtrend line we may then consider it as a validation for this bullish view and may expect the price to move higher further.
EURJPY H4(4 Hours) Chart Current Scenario
In this pair based on the above-mentioned analysis, my view was bullish here and I was expecting the price to move higher further until the key support zones hold. Also, I mentioned that “If we get a valid breakout above the most recent downtrend line we may then consider it as a validation for this bullish view and may expect the price to move higher further”. The price action didn’t follow my analysis here, the validation for the bullish view which is a valid breakout above the downtrend line didn’t happen and the price moved lower and broke below the second key support zone and held below it, thus invalidating the bullish view. My current view on this pair is neutral.
Even though we had facts supporting the bullish view here, the validation for the bullish view which is a valid breakout above the most recent downtrend line didn’t happen here. The price which bounced higher from the first key support zone reached the downtrend line but it didn’t break above it. Alternatively, the price respected the downtrend line and then it moved lower and broke below the first key support zone. Then as you can see in the image above how the price moved lower further and broke below the second key support zone as well after that, thus invalidating this bullish view. This is why we should always trade based on the facts and hints provided by the market and take the right actions according to that.
So traders, when it comes to trading, there are various important factors that we need to pay attention to, just because we have a good setup doesn’t mean that we can enter the trade randomly and it will pay us huge profits. First of all, we need to validate the entry and we should have a perfect entry plan to get into the trade which is a key factor when it comes to trading. This EURJPY forecast is yet another good example of this scenario.
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Happy Trading!
Arvinth Akash
Traders Academy Club Team
