The Japanese Yen has been seen taken badly out by the cross currency pairs against it after King Dollar gained some strong grounds on maintaining bullish momentum and driving rest of the high along with it - dragging the Japanese Yen against most of the currencies. EURJPY took a retest of the 50% fibo retracement level at 128.46 and managed to reverse the losses by breaking above the 61.8% fibo level. Euro versus Japanese Yen broke above our strong resistance zone 130.88 - tearing swiftly through the ichimoku cloud and currently flirting with 131.40 price action. The cross remains underpinned by the recent breakout of the key 200-day SMA and now shifts the attention to the next hurdle at 131.75, where a Fibo level of the June-August drop sits. The continuation of the move should target the round level at 132.00 the figure ahead of another Fibo level at 132.79.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

From a weekly perspective, the price is firmly bid and it can easily move higher. However, when examining the price action on the lower time frames, it makes the W-formation on both the weekly and daily charts compelling. The W and M harmonic patterns are reversion patterns by nature and have a high completion rate. Therefore, the price would be expected to retrace some of the recent bids in due course. Examining the daily chart, that reversion could be imminent. By measuring the peaks of Aug to current highs and comparing them to no fresh highs in RSI over the same time period, this is a bearish divergence.

However, it is a relatively weak divergence considering RSI is flat between the peaks. We would want to see a lower current high to that of Aug's peak for stronger divergence. Nonetheless, the confluence of factors points to a downside correction. A target to the prior daily highs near the 38.2% Fibonacci retracement level is a compelling zone between and near 130.50 and 130.20.

EURJPY

Oct 13 2021