Hi Traders! EURJPY short term forecast update and follow up is here. On December 22nd 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, based on the Heikin Ashi candles we can see that currently, we have strong bearish bodies here as well in downward-moving market conditions so it basically reflects a bearish environment. In addition to this, the price which is moving lower has created a bearish trend pattern in the form of three lower highs, and lower lows which we may consider 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 a correction is happening. Also, we had two strong support zones that have formed, the price moved lower broke below these zones and is holding below them, we may consider this as yet another evidence of bearish pressure. Currently, these strong support zones are acting as strong resistance zones for us. Until these two strong 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.
In EURJPY 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 correction with the price reaching the second strong resistance zone, respected it and then it bounced lower from this zone. Also, we had a bearish divergence formed between the first high formed at 140.508 and the second high formed at 142.941 based on the histogram of the MACD indicator. The price then moved lower and broke below the most recent uptrend line, we may consider these as facts provided by the market supporting the bearish view. The price then moved lower further as I expected it to and delivered 550+ pips move to the downside 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.
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