Hi Traders! EURJPY short term forecast update and follow up is here. On July 18th I shared this “EURJPY Short Term 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 Home Trader Club. Spoiler alert – free memberships are available!
My Idea
On the H1 chart, we could see that the price which is moving lower has created a bearish trend pattern in the form of three lower highs, lower lows we may consider this as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then further continuation lower. Currently, it looks like the correction that we were looking for is happening. Also, while measuring the first wave of this correction, we have two key resistance zones that has formed. The first key resistance zone is formed by the 100% (155.942) Fibonacci expansion level of the first wave and the second key resistance zone is formed by the 161.8%(157.045) Fibonacci expansion level of the first wave. The price has currently reached the first strong resistance zone, respected it and is bouncing lower from it. In addition to this, we had a bearish divergence that has formed between the first high that has formed at 156.531 and the second high that has formed at 156.336 based on the MACD indicator, we may consider this as another evidence of bearish pressure. Until these two key resistance zones (marked in red) shown in the image below hold my short term view remains bearish here and I expect the price to move lower further.
On the H1 chart, until the two key resistance zones hold I was expecting short-term bearish moves to happen here. The price action moved exactly as I expected it to in my analysis. After the bearish trend pattern, we had a pullback with the price reaching the second key resistance zone, respected it and then it bounced lower from this zone and delivered 160+ pips move. The price then moved higher and created a false break of the second key resistance zone and then it moved lower further and broke below the most recent uptrend line, we may consider these as evidences of bearish pressure. The price then moved lower further and delivered 660+ pips move as you can see in the image below!
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 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 to us and took the right action according to that.
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Happy Trading!
Arvinth Akash
Home Trader Club Team.
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