All we need to receive it is for the EURJPY to close below one mid-term dynamic support.
H&S for a Start
Let’s start from the very beginning. The gray formation you see on the chart is the Head and Shoulders pattern which, in theory, ended the uptrend and started a bearish tone. Technically, it happened on May 12th when the EURJPY broke the neckline (green) of the H&S formation.
After that, the price entered the correction stage, which created a wedge pattern (blue). It looks like the wedge is coming to an end, as we’re currently testing its support after a successful bounce off the mid-term down trendline (red). The lower line of the wedge is the support I mentioned at the very beginning, the one that needs to be broken in order to receive a major sell signal.
Target for the Sellers
In case of a breakout, the target will be on the 133.1 support (yellow), which has already proven its effectiveness. The negative sentiment cancels when the price breaks the red down trendline, but chances for that happening are now rather limited.
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