Price has decreased significantly in the last days and now is located right below a very important downside obstacle. It has found a temporary support and now has come back to test and retest the broken support.
EUR/JPY is trading in the red right now and could approach the 124.89 former low. Price continues to stay much above some crucial support levels, so only a valid breakdown below the near-term downside obstacles will announce a further drop.
The Yen increased as the Nikkei stock index has dropped significantly today after yesterday’s impressive rally. A Nikkei’s further drop will force the Yen to dominate the currency market.
You can see that the JP225 index has failed to approach and reach the first warning line (WL1) of the descending pitchfork and now is trading below the 150% Fibonacci line. It could approach and reach the lower median line (lml) of the ascending pitchfork after several failures to reach and retest the median line (ml).
Personally, I’m expecting to see a valid breakdown through the lower median line (lml) if the rate will reach it. So, a Nikkei’s sell-off will send the Yen much higher versus all its rivals.
EUR/JPY is pressuring the inside sliding line (SL) of the major ascending pitchfork after the failure to reach the LML or to close near the lower median line (lml) of the minor ascending pitchfork. Maybe the rebound will be only a temporary one and the price will drop again. Only a valid breakdown through the lower median line (LML) of the major ascending pitchfork it will signal a larger downside movement.
However, if the rate will fail to reach and retest the LML or if we’ll have a false breakdown through it, then we may have a significant upside movement.