Daily Forex Update: EUR/JPY

By: Dima Chernovolov

EUR/JPY continues to fall inside the uniform 4-hour Down Channel chart pattern which was previously identified by Autochartist. Autochartist rates the quality of this Down Channel at the 5-bar level – which is the result of the slow Initial Trend (2 bars), strong Uniformity and Clarity (both rated at the 8 bar level). EUR/JPY is expected to fall further inside this Down Channel – in line with the earlier breakout of the key support area highlighted below.

As can be seen from the weekly EUR/JPY chart below, the price broke through the strong support zone lying between the key support level 127.90 (which also reversed the price in May) and the 38.2% Fibonacci correction of the previous sharp upward impulse from April.  This price area is acting as a strong resistance zone after it was broken. The proximity of this resistance zone increases the probability EUR/JPY will continue to fall inside this Down Channel.

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