Hi Traders! EURJPY short term forecast update and follow up is here. On January 12th 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 H4 chart, we could see that the price which was moving lower has created a bearish trend pattern in the form of three lower highs, and lower lows we may consider this as evidence of bearish pressure. Generally, after a bearish trend pattern, we may expect corrections and then a further continuation lower. Currently, it looks like the correction that we are looking for has happened in the form of a double wave to the upside. In addition to this, we had a bearish hidden divergence that formed between the first high formed at 142.941 and the second high formed at 141.357, followed by a continuing bearish divergence between the first high that formed at 141.357 and the second current high that formed at 142.851 based on the MACD indicator, we may consider these as other evidence of bearish pressure. In addition to this, the ADX indicator gave a bearish signal here at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads a value over 25 which we may consider as yet another evidence of bearish pressure. Also, we had two strong support zones and the price which was moving lower has broken below these zones and holding below them. We may consider this as yet another evidence of bearish pressure. Currently, these two strong support zones are acting as two strong resistance zones for us. Until both, these 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.
EURJPY H4(4 Hour) Chart Current Scenario
On the H4 chart, until the two strong 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 first strong resistance zone, respected it and then it bounced lower from this zone. We also had a bearish divergence between the first high which formed at 141.357 and the second high that formed at 142.851 based on the MACD indicator. The price then moved lower and broke below the most recent uptrend line, we may consider this as evidence of bearish pressure. The price then moved lower further and delivered around 300 pips move! We then had a pullback and then the price moved lower again and delivered 370+ pips move as you can see in the image below!
(Note: You can learn about a Killer Forex Strategy “Double Trend Line Principle” here)
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.
