Price increased a little and is trying to recover after the morning impressive drop. EUR/JPY opened with a gap down in the morning, signaling that the bears are in full control. However, is premature to talk about another leg lower at this moment because the is located right above a very strong dynamic support.
Only a valid breakdown will confirm a potential drop in the upcoming weeks, while a rejection from here will announce a bullish momentum. Technically seems a little exhausted and seems poised for another drop. The Yen increased sharply because the Nikkei stock index plunged aggressively.
I’ve added the JP225 chart to show you why the Yen appreciated sharply today. You can see that has opened with a gap down in the morning and plunged below the first warning line (WL1) of the major ascending pitchfork. A valid breakdown will open the door for more declines in the upcoming period, the next downside target will be at the red uptrend line, which represents a crucial support.
The failure to close above the 19700 static resistance has signaled an overbought and a potential drop in the upcoming period. Has also failed to reach and retest the upper median line (uml) of the minor descending pitchfork.
The Yen received support also from the Monetary Base indicator, which was reported at 16.3%, much higher versus the 15.6% estimate and versus the 15.6% in the former reading period.
Price dropped, but failed to retest the upper median line (UML) of the major ascending pitchfork. Now is trying to close the morning gap, but seems like will drop further in the upcoming days. Is somehow expected to drop further on the short term after the failure to retest the of the red uptrend line and the outside sliding line (ascending dotted line).
However, a major drop could be signaled if the rate will close under the UML and if will retest it, otherwise could jump much higher in the upcoming period.
From the Andrews Pitchfork’s analysis viewpoint, the rate failed to make new highs, signaling that a sharp drop could appear.