Technical Analysis: EURJPY (05.07.2021)

EURJPY pair has been moving in an upward trend since the beginning of November. Nevertheless, looking at the D1 interval, the first indications of a trend reversal or a larger downward correction appeared. Referring to the Overbalance methodology, the layout of the largest correction (purple rectangles) has recently been negated, which may indicate that the sellers are taking the initiative. Moreover, the upward movement clearly lost momentum, which resulted in a break below the lower limit of the upward channel, which also, according to the classic technical analysis, favors the market bears.

On the other hand it should be noted that buyers defended an important, horizontal support zone at the level of 130.60. So it seems that only a break below this level could open the way towards deeper declines. If such a break occurs, the Fibonacci retracements should act as the next levels of support. The main resistance zone is located at 134.10, however earlier buyers will have to break above the aforementioned lower limit of the upward channel.

EURJPY interval D1. Source: xStation5