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EUR/JPY on the crossroads – is big move on a horizon?

The euroyen currency pair broke a crucial trend line, indicating this may be the end of an uptrend. Still, confirmation is needed.

EUR/JPY has been sliding lower ever since the Bank of Japan (BoJ) intervened in late October. These bearish moves are slow, but surely they form a possible reversal. 

EUR/JPY technical analysis

The last candle indicates that the currency pair is trying to break from the current pattern to the downside. However, it’s important to wait for a confirmation on lower timeframes and another weekly candle. If this scenario plays out, EUR/JPY may be headed in the pink area, which is a potential 800-pip move.

EUR/JPY weekly timeframe, source: tradingview.com

Now, the daily timeframe is the most important one. The daily candle seems to be closing a pin bar, but the trend line has been broken. This looks like a clear sell signal and confirmation on a lower timeframe is needed. 

Also read: Silver corrects this week’s gains after US jobs data

After months of being in an uptrend, EUR/JPY is moving lower, breaking a crucial level at approximately 144. The weakening dollar helps the Japanese yen and other fiat currencies to gain strength and this move could continue at least until the end of the year. 

EUR/JPY daily timeframe, source: tradingview.com

A little pullback upward will create a solid sell signal, where approximately 200 pips should be sufficient as a stoploss. Takeprofit, on the other hand, could be at least twice as large as stoploss. Thus, EUR/JPY is offering a sell trade opportunity with a risk-reward-ratio (RRR) of a minimum of 1:2. 

EUR/JPY 4H timeframe, source: tradingview.com

Conclusion

Do not forget this is only a technical perspective of charts, so fundamental events like the Fed’s rate hike in the middle of December may bring extraordinary volatility. More importantly, wait for the confirmation before entering because it’s okay to miss a trade. The next one will come for sure. 

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...

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