In this series, we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. Euro has fallen nearly 5.5% year-to-date against the Japanese Yen with price reversing just ahead of multi-year uptrend support this week. Here are the key targets & invalidation levels that matter on the EUR/JPYweekly chart heading into the close of the month.
EUR/JPY WEEKLY PRICE CHART
Notes: EUR/JPY has been trading within the confines of this slope series originating off the July 2016 low. Parallels of this trendline have been instrumental in the last few major price reversals and the recent decline turned just ahead of the slope extending off the October 2016 high. Note that price has not registered a weekly close below this threshold all year.
The immediate support zone in focus is 127.57/75– a region defined by the October low-day close, the November open and monthly low, the 200-week moving average and the 2018 low-week close. A close below this threshold would risk substantial losses in EUR/JPY with such a scenario targeting 124.92 and more significant support confluence around the 50% retracement at 123.35/50.
Bottom line: EUR/JPY is trading just above critical weekly support with the immediate short-bias vulnerable heading into 127.57/75 / slope support. From a trading standpoint, a good region to reduce short-exposure / lower protective stops. For now, be on the lookout for possible price exhaustion on a move into the highlighted support zone with a breach above the descending parallel (dotted line) extending off the April highs needed to alleviate further downside pressure. Subsequent topside objectives stand at the 52-week moving average (currently 130.70s) with broader bearish invalidation at yearly trendline resistance. I’ll publish an updated EUR/JPY scalp report once we get further clarity on near-term price action.