The EUR/JPY has hit a strong support and now is moving sideways on
the short term, could continue the range until will have a clear direction. The
price has decreased significantly in the fresh start of this week and now is
approaching the last week low, could drop even lower if the Yen will have
enough power to remain strong, the pair is on a declining path, so the
perspective remains bearish on the short and medium term. The Euro has
decreased today versus all its counterparts after the mixed data from
Euro-zone, I can say that the European currency has taken a blow from the
Euro-zone data, the figures have come worse and have sent the Euro down. The
Flash Manufacturing PMI has decreased from 51.7 to 51.5 points, has decreased
unexpectedly because the estimate was 51.9 points, the expansion has slowed
down and have weakened the Euro. Moreover the Flash Services PMI has remained
the same at 53.1 points, even if the traders have expected an increase to 53,3
points.

The German and French manufacturing and services numbers have come
mixed as well, the Euro wasn’t impressed even if the German services sector
expansion continues, the Flash Services PMI has increased from 54.5 to 55.2
points in May, the economic indicator has exceeded the 54.6 points, while the
Flash manufacturing indicator has surged to 52.4 from 51.8 points. The French
Flash Services have increased to 51.8 points, signaling that the expansion has
continued, while the French manufacturing sector has remained deep in the
contraction territory.

The Yen has surged aggressively in the early morning as the Japanese
Trade Balance has increased from 0.30T to 0.43T, the trade surplus has lifted
the Yen even if the Japanese manufacturing sector continues to contract. 

The EUR/JPY has found strong support at the 50% retracement level,
now is approaching the support level again and most likely will challenge this
dynamic support. We have a strong confluence area here at the intersection of
the sliding parallel line with the 50% retracement level and with the median
line (ml) of the short descending pitchfork, the pair was attracted by this
confluence area, a drop below this area will open the door for more declines,
the price will plunge to new lows, the next major downside target is at the
61.8% retracement level. The medium term correction phase is expected to
continue if the price will close below the 50% retracement level, but my
feeling tells me that the price could move sideways on the short term, looks like
that he price is losing bearish momentum as the median line of the descending
pitchfork is acting as a very strong support, has paused the downward movement.

 

The price continues to trade inside the descending pitchfork between
the upper median line (uml) and the median line (ml), the pair is moving
somehow sideways on the short term, is trapped below the 126.05 horizontal
resistance and is expected to pressure the 50% retracement level any drop below
this level will lead the price toward fresh new lows, the outlook remains
bearish as long as the price is trading inside the descending pitchfork’s body. 

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