EUR/JPY- Ready for a breakdown?
On March 7th, EUR/JPY made a low print of 124.40. Since then, the pair has been moving higher in an ascending wedge formation. On October 21st, the pair attempted to breakout above the top trendline of the pattern, reaching an intraday high of 148.40. However, Japan’s Ministry of Finance stepped in and intervened in the fx markets by buying Yen.
That was the last time EUR/JPY touched the top trendline of the pattern. As is often the case, when price fails to break out of one side of a pattern, it moves to test the opposite trendline of the pattern. The expectation for an ascending wedge is that price will break lower as it nears the apex. The target for a breakdown from an ascending wedge is a 100% retracement, or 124.40 in this case. On December 2nd, EUR/JPY pierced through the bottom trendline, reaching its lowest level since early October at 140.77. On December 5th, the pair moved back into the ascending wedge, closing at 143.38.
Will the bottom trendline hold or Is EUR/JPY finally ready to breakdown? If price breaks below Friday’s low at 140.77, it could be off to the races. First support is at the 200 Day Moving Average near 139.20. Other support levels ahead of the target are at 137.38, then 133.41. However, if the pair continues higher within the wedge, the top trendline of the pattern crosses near 149.20. If price reaches this level, one must use proper risk management as Japan may intervene in the market once again.
That was the last time EUR/JPY touched the top trendline of the pattern. As is often the case, when price fails to break out of one side of a pattern, it moves to test the opposite trendline of the pattern. The expectation for an ascending wedge is that price will break lower as it nears the apex. The target for a breakdown from an ascending wedge is a 100% retracement, or 124.40 in this case. On December 2nd, EUR/JPY pierced through the bottom trendline, reaching its lowest level since early October at 140.77. On December 5th, the pair moved back into the ascending wedge, closing at 143.38.
Will the bottom trendline hold or Is EUR/JPY finally ready to breakdown? If price breaks below Friday’s low at 140.77, it could be off to the races. First support is at the 200 Day Moving Average near 139.20. Other support levels ahead of the target are at 137.38, then 133.41. However, if the pair continues higher within the wedge, the top trendline of the pattern crosses near 149.20. If price reaches this level, one must use proper risk management as Japan may intervene in the market once again.
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