EUR/JPY long-term technical analysis
Brexit has happened and Euro seems on the backfoot while Pound sterling gaining. The pressure get more intense when China reported coronavirus outbreak. The world shaken by the situation and we have downward revision of growth projection. Hong Kong has entered a recession and Singapore just announced a possible recession caused by coronavirus. Moreover, China might not reach the growth target above 5%.
EUR/JPY starts its downward movement in January and extends it in February. We might have a new bearish leg which could last for medium-long-term. Slowing in the global market economy is a confirmation to flight to safe-haven currencies such as Japanese Yen.
On the monthly chart of EUR/JPY, we could see a clear rejection from the top of the channel and 121.50 resistance. EUR/JPY currently traded lower and set to continue its bearish trend inside the channel. It is better to stay on the short side until the pair reach the nearest support level and formed a major bullish reversal pattern.
Similar to the monthly chart, the weekly chart also shows rejection from the top of the channel and the 121.50 resistance. Without a change in the direction, EUR/JPY expected to reach 117.80 support level. Traders will observe the pair reaction at the support level. A bullish bounce might happen after the test.
EUR/JPY breakout below 119.20 recently and maintained the level below it. The pair printed lower low today and expected to continue its bearish movement. It is better to wait until the pair reach 117.80 before deciding what to do next.
Long positions might be possible after the pair reach 117.80 and formed a major bullish reversal pattern. A bounce might happen and EUR/JPY could reach 119.20 resistance level.
Short positions will need to wait until the pair make bullish correction toward 119.20 after the test of 117.80. At the current time, traders who have no short positions better-waiting sideline. Traders who has positions could continue hold it.