EUR/JPY edged higher and resume the rebound, we’ll see what will happen now because has reached a major dynamic resistance (support turned into resistance). Price has found strong support and now is trying to jump in the buyer’s territory.
The pair rallied as the Yen was weakened by the Nikkei’s rebound, the index has lost the bearish momentum after the failure to close below the 19309 previous low. The JP225 is narrowing at this moment and is fighting hard to recover in the upcoming days.
I’ve added the Nikkei’s chart to show you what’s happening with the Yen and why has decreased versus the Euro. You can see that has resumed the yesterday’s bullish candle and could climb much higher after the retest of the first warning line (WL1) of the ascending pitchfork.
Has show the first exhaustion signs when has failed to retest the 50% Fibonacci line (descending dotted line) and now is somehow expected to approach and reach the upper median line (uml) of the descending pitchfork.
Only a valid breakdown below the WL1 will open the door for a further drop and for a Yen’s dominance. The Euro increased significantly today on the mixed Euro-zone data, the German Ifo Business Climate decreased from 116.0 to 115.9 points, but has come in better versus the 115.5 estimate, while the German Final GDP rose by 0.6%, matching expectations. Moreover the German Import Prices dropped by 0.4%.
Price rallied and touched the upper median line (UML) of the major ascending pitchfork, we’ll see how will react. Has rallied after the false breakdown below the 38.2% retracement level, a valid breakout above the UML will signal a further increase in the upcoming period. Only a rejection from here will signal a further drop in the upcoming weeks. Is premature to say what will happen because the fundamental factors will drive the rate in the fresh start of the next week.
Technically was somehow to drop further after the breakdown from the Rising Wedge pattern, but the current rebound has invalidated the minor potential Head and Shoulders pattern.