EUR/JPY has been cruising steadily higher inside an ascending channel on its 4-hour time frame, and it looks like a trend pullback could be due soon.
Here are the support levels to watch on the 4-hour time frame:
EUR/JPY 4-hour Forex Chart by TradingView
Yen traders appear to be easing up on their hawkish BOJ expectations over the past few weeks since Governor Ueda has been highlighting global trade uncertainty in his latest speeches.
At the same time, concerns about super-long Japanese bond yields are also weighing on the currency while risk-on flows from US-China trade talks are coming in play.
Can EUR/JPY sustain its uptrend from here?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the euro and the Japanese yen, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The pair is currently hitting a ceiling at the top of its ascending trend channel, possibly spurring a pullback to nearby support zones marked by the Fibonacci retracement tool.
The 38.2% Fib lines up with the pivot point (164.38) then the 50% level is closer to the mid-channel area of interest near the 164.00 major psychological support. A larger correction could reach the 61.8% Fib or even the channel bottom near S2 (161.90).
Watch out for reversal candlesticks at these levels, as a return in upside pressure could lift EUR/JPY back up to the swing high at R1 (165.97) or the channel top.
Don’t forget that the 100 SMA is still holding above the 200 SMA to indicate that the path of least resistance is to the upside, so a strong breakout above the channel resistance could also be possible.
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
