EURJPY looks poised for more losses, as the pair recently broke below the descending triangle support on its daily time frame. Stochastic is already in the oversold zone, indicating that a bounce might take place in case the break is a fakeout.
A rally could take the pair up to the previous highs near the 140.00 area, but the moving average downward crossover is suggesting that the path of least resistance is to the downside. MACD is also moving lower, which suggests that downward momentum is building up.
Take note that the chart pattern is approximately a thousand pips in height, which means that the resulting selloff might last by the same amount. This could take EURJPY to the next area of interest around the 126.00 levels.
The event risks for this trade include testimonies by Draghi and the German ZEW economic sentiment release later on this week. There are no major reports up for release from Japan, but the risk-off environment could keep the lower-yielding yen supported.
By Kate Curtis from Trader’s Way