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  • EUR/JPY is building a case for the upside on the daily chart.
  • There are bearish prospects on the monthly chart from resistance. 

EUR/JPY is currently trading at 126.40 in a quiet start to the day while the price steadies following a sharp drop to test key daily support.

The following is a top-down analysis that illustrates where the next opportunity could arise from a swing trading perspective.

Monthly chart

The monthly chart has seen a firm rejection from the neckline support and test of resistance. 

However, there is a probability of a 38.2% Fibonacci retracement before the next move to the upside can gain traction. 

Weekly chart

A series of W-formations has pulled the price in to test their necklines. 

The level has a direct confluence with a 38.2% Fibonacci retracement which has so far held and leaves the bias with the bulls for a test of the over head resistance. 

Daily chart 

From a daily perspective, the environment is still bearish given the strength in the daily bearish impulse which has taken the price down to test the key support area. 

So long as the price holds and starts to move higher, then bulls can start to look for an optimal entry point on the lower time frames.