Published: July 6th, 2021
The delta coronavirus is rapidly spreading through Britain, where it is highly possible to expand the infection in the Eurozone. While the vaccination rate is increasing for the old continent, the quick contagion is causing bearish pressure in the EURJPY.
Moreover, the Eurozone inflation rate is another factor that may increase the selling pressure for the Euro. The Consumer Price Index was down by 1.9% year-over-year, while the Core CPI slid to 0.9%. On the other hand, the Bank of Japan has a higher possibility of making any decision to strengthen the Yen, following Japan's better-than-expected economic performance and export dependency. In this situation, EURJPY has more room to show a bearish pressure in the coming days.
Let’s see the future price direction from the EURJPY technical analysis:
EURJPY showed a massive bullish trend since the beginning of 2021 that pushed the price higher above the 133.00 level. However, the price failed to hold the bullish pressure above the 133.00 level and moved down by creating multiple swing lows. Moreover, the most recent bearish pressure below the 132.00 event level created hope for sellers to take the price lower. Therefore, as long as the price is trading below the 132.00 level, it has a higher possibility of continuing the bearish pressure in the coming days.
In the above image, we can see the daily chart of EURJPY, where the price is moving down with multiple bullish rejections at the 132.00 level. Here the next important price level is 129.70, where the bearish pressure may head.
In the indicator window, Aroon Down (red line) is above the Aroon Up (blue line), pointing out that sellers are controlling the price. In that case, if the Aroon Down moves above the 60% level, the price may come down toward 129.70 support level with strong bearish pressure.
However, a stable bullish price action above the 132.00 level may invalidate the current bearish pressure and continue the bullish trend towards the 134.10 level.
If we plot the Ichimoku Kinko Hyo in the EURJPY H4 chart, we would see that the price broke below the Cloud Support with an impulsive bearish pressure on 15 June 2021. Later on, the price tried to recover the bearish pressure but failed. Finally, in the most recent scenario, the price moved down below 131.30 intraday leve, with an intense selling pressure where the dynamic Tenkan Sen and Kijun Sen are above the price. Moreover, the Senkou Span A is below the Senkou Span B in the future cloud while the Chikou Span is below the price.
Based on the H4 chart, most Ichimoku elements show a possible selling pressure in the coming sessions. However, the bearish sentiment is valid as long as the price is trading below the dynamic Kijun Sen. A bullish H4 close above the Kujun Sen and 132.00 resistance level may take the price higher towards the 133.50 area.
In the indicator window, MACD Histogram is bearish and making new lows, signifying upcoming bearish pressure.
Based on the intraday price chart, EURJPY Sellers are active in the chart as the price moved below the 132.00 support level with price stability. However, later on, the bearish pressure increased as soon as the price moved down from the intraday high volume level of 131.62. Therefore, as long as the price is trading below the 131.62 level, the intraday selling pressure may continue.
The above image shows that the price moved down from the dynamic vwap and 20 EMA with an impulsive bearish pressure that broke the near-term low of 131.27. However, a correction is pending that may take the price higher. Still, any bullish rejection from the dynamic vwap may eliminate the bullish possibility and take the price lower towards the 130.00 level.
Moreover, Aroon Up is still at the 100% level, pointing out that the price is within the strong selling zone.
As of the above discussion, we can say that EURJPY has a higher possibility of coming lower towards the 129.71 support level as long as the price is trading below the dynamic Kijun Sen in the H4 chart.
On the other hand, any strong bullish H4 close above the Kumo resistance at the 131.98 level may initiate a broader correction to the price.