If you trade EUR/JPY then you should take a look at the forex reversal signals seen on its 4-hour time frame. There’s a double top pattern, which is a classic indicator of a possible selloff, on the chart and the pair has yet to break below the neckline around the 140.50 minor psychological level.
A break below this neckline would indicate that the pair could be headed down by at least 300 pips, which is the same as the height of the chart pattern. The pair could also move until the previous lows around the 136.50 minor psychological support.
Technical Forex Reversal Signals
From the Ichimoku Kinko Hyo indicator, the green line made an early sell signal since it just crossed below the price. The price also moved below the blue line, indicating that a downtrend is starting. The red line confirms this trending market behavior is a forex reversal signal.
A break below the support zones marked on the 4-hour time frame are forex reversal signals as well. These will now act as resistance zones if the pair confirms the selloff.
Fundamentally, the euro is in a weak spot since it faces a potential rate cut or further easing from the ECB. Draghi has mentioned that negative deposit rates are one of the options they are considering, along with the idea of expanding their bond purchases operations.
As for the Japanese yen, the recent sales tax hasn’t made any negative effects on spending so far and BOJ Governor Kuroda said that easing isn’t necessary for now. This led to yen gains in the Asian trading session with enough follow through seen in the European session. Kuroda also mentioned that Japan is on track to meet its 2% CPI target by the end of the year, although he expects inflation to hold steady around 1% in the near term.
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