Time Zone: GMT +2
Time Frame: 4 Hours (H4)
Fundamental Analysis:
The EURJPY currency pair captures the exchange rate between the Euro and the Japanese Yen, two significant global currencies. The Euro’s value may be influenced by economic indicators from the Eurozone, such as GDP growth rates, inflation, and the European Central Bank’s monetary policy decisions. Conversely, the Japanese Yen is often viewed as a safe-haven currency and can be affected by Japan’s economic health, Bank of Japan’s policy shifts, and global risk sentiment. The dynamic between these economies, especially in terms of trade relations and relative economic performance, shapes the fundamental backdrop for this pair.
Price Action:
Examining the H4 timeframe for EURJPY, we observe a bearish trend with the price making lower highs, which could suggest a continuation of the downward momentum. The recent sharp sell-off further underscores the bearish sentiment in the market.
Key Technical Indicators:
RSI (Relative Strength Index): The RSI is below 30, indicating an oversold market condition which may hint at a potential reversal or a relief rally.
MACD (Moving Average Convergence Divergence): The MACD is below the signal line and negative, reinforcing the bearish trend. However, the histogram bars appear to be shortening, suggesting a possible loss in downward momentum.
Parabolic SAR: The last four dots of the Parabolic SAR are above the price candles, aligning with the bearish signal indicated by the other indicators.
Volumes: The volume bars are inconsistent, with no clear trend suggesting a decisive move, which could indicate a lack of conviction among traders.
Support and Resistance:
Resistance: The descending trendline, currently around 162.000, acts as the immediate resistance level.
Support: The recent low near the 159.500 zone serves as the current support level.
Conclusion and Consideration:
The EURJPY pair on the H4 chart is in a bearish phase, supported by the price action and confirmed by the key technical indicators. While the oversold RSI may suggest a potential for a rebound, the prevailing trend remains downward. Caution should be exercised as the potential for a relief rally exists, especially if fundamental factors from the Eurozone or Japan shift market sentiment. Traders should keep an eye on economic releases and central bank communications from both regions to gauge potential trend changes. Managing risks with stop-loss orders near resistance levels and considering profit-taking near support zones is advisable.
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Trading involves significant risk, and it is crucial to conduct your research before making any investment decisions.
December 4, 2023
