EUR/JPY Resumes the Downtrend
EUR/JPY retraced higher last week, but the retrace ended at the 50 SMA and now sellers are back in control
EUR/JPY has been on a bearish trend for a long time, since February 2018 when it reversed at 137.50. So, this means that EUR/JPY has lost around 22 cents since then. During this time, we have seen some decent pullbacks higher, but they have eventually faded and the bearish trend has resumed again.
Moving averages have done a good job in providing resistance during these retraces higher, most of the time. They have also provided support when the price has moved above them. In Q4 of last year, we saw a 5 cent pullback higher, as the sentiment improved a little, with the US and China heading into a partial trade deal.
But, the bearish trend resumed again as coronavirus broke out in China earlier this year and the spread in Europe and the US has killed the risk sentiment in financial markets. At the end of last week, we saw a 220 pips retrace higher, but the retrace ended right at the 50 SMA (yellow) on the daily chart.
The price formed a doji below that moving average, which is a bearish reversing signal and the downtrend resumed again. Now EUR/JPY is around 200 pips lower again. That was a good opportunity to open a long term sell forex signal, but we missed that chance. We will follow this pair though, to see if another retrace higher takes place, which we will try to sell.
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