Hi Traders! EURJPY short term forecast update and follow up is here. On June 23rd 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 Traders Academy Club. Spoiler alert – free memberships are available!

My Idea

On the H1 chart, we could see that the price which was moving higher has created a bearish divergence between the first high that has formed at 144.008 and the second high that has formed at 144.243 based on the MACD indicator. The price then moved lower and broke below the last low at 142.668 creating lower lows, thus forming a classical setup of bearish divergence followed by bearish convergence, we may consider these as evidences of bearish pressure. Generally, after a bearish convergence we may look for corrections and then further continuation lower. Currently, it looks like a correction is happening. In addition to this, the ADX indicator gave a bearish signal here as well at the cross of -DI (red line) versus +DI (green line) and the main signal line (silver line) reads value over 25 which we may consider as yet another evidence of bearish pressure. Until the key resistance zone (marked in red) holds my short term view remains bearish here and I expect the price to move lower further after pullbacks.

EURJPY H1(1 Hour) Chart Current Scenario

Based on the above-mentioned analysis my short term view was bearish here and I was expecting the price to move lower further until the key resistance zone holds. After the bearish convergence we had a deeper pullback with the price reaching the key resistance zone again, respected it and bounced lower from this zone. The price then moved lower further as I expected it to and has delivered around 700 pips move!

On the H1 chart, the market provided us with various facts supporting the bearish view. The price which was moving higher created a bearish divergence between the first high that has formed at 143.479 and the second high that has formed at 144.273 based on 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 and also there we no signs opposing this bearish view. Then as you can see in the image below how the price moved lower further and provided a fantastic move to the downside.

(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 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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