EURJPY Technical Analysis: Bearish Rejection at Resistance Targets 172.40
Muhammad Faraz 
EURJPY Technical Analysis Bearish Rejection at Resistance Targets 172.40
EURJPY’s price has faced a significant rejection from a defined and strong resistance zone between 175.000 and 174.000. This price action suggests a bearish bias is forming as buyers fail to sustain momentum. Our analysis projects a decline towards a primary target of 171.35, with an intermediate target at 172.40. This prediction is based on a confluence of technical factors, including the clear identification of a multi-touch resistance zone and the subsequent break of near-term support structure.
Current Market Structure and Price Action
The broader market structure has shifted from bullish to corrective. The price has established a clear lower high on the daily chart, confirming a break in the prior bullish structure. The asset is currently trading just below a critical resistance confluence and has recently shown bearish momentum, breaking below the 173.00 handle. This indicates that selling pressure is overcoming buying interest, and a further breakdown is likely.
Identification of the Key Resistance Zone
The most critical technical element is the Strong Resistance Zone between approximately 174.500 and 175.000.
The strength of this zone is derived from:
- Historical Significance: This level has acted as a major swing high and consolidation area on multiple occasions throughout August, September, and October, as clearly visible on the provided chart. Each touch has resulted in a notable sell-off.
- Technical Confluence: The zone represents a significant psychological barrier (175.000) and has been tested repeatedly, strengthening its importance with each failed breakout attempt.
- Market Psychology: This area represents a point where sellers (profit-takers and new short entries) have consistently overwhelmed buyers, creating a “ceiling” for the price.
This multi-touch resistance confluence makes it a high-probability level for a bearish reaction, which is now underway.
Technical Target(s) and Rationale
Our analysis identifies the following bearish price targets:
- Primary Target (PT1): 172.40
- Rationale: This level represents a previous major swing low and a consolidation area from late September. It acts as the first significant support level below the current price and is a logical initial target for the bearish move.
- Secondary Target (PT2): 171.35
- Rationale: This is a stronger and more significant support level. It represents a key swing low from mid-September and a breach below 172.40 would open the path for a test of this deeper support zone.
Prediction: We forecast that the price will continue its descent from the resistance zone and move towards PT1 at 172.40. A sustained break below that level would then target PT2 at 171.35.
Risk Management Considerations
A professional strategy is defined by its risk management.
- Invalidation Level (Stop-Loss): The entire bearish thesis is invalidated if the price achieves a daily close above the resistance zone, notably above 175.00. This level represents a clear break of the market structure that justifies the prediction (i.e., the series of lower highs would be broken).
- Position Sizing: Any short positions taken should be sized so that a loss triggered at the invalidation level (e.g., 175.20) represents a small, pre-defined percentage of your total capital (e.g., 1-2%).
Fundamental Backdrop
The technical setup is framed by the current fundamental landscape:
- Bank of Japan (BoJ) Intervention Risks: Markets remain wary of potential FX intervention by Japanese authorities to support the Yen, which could catalyze a sharp drop in JPY pairs like EURJPY.
- European Central Bank (ECB) Policy: The ECB’s dovish tilt compared to other major central banks continues to weigh on the Euro, creating a push-pull dynamic with the weak Yen.
- Risk Sentiment: As a cross-currency pair, EURJPY is sensitive to global risk appetite. A deterioration in risk-off sentiment could benefit the JPY as a safe-haven and accelerate the pair’s decline.
These factors contribute to the cautious and potentially bearish sentiment surrounding the pair.
Conclusion
EURJPY is at a technical inflection point following a clear rejection from a formidable resistance zone. The weight of evidence suggests a bearish resolution, targeting a move first to 172.40 and potentially extending to 171.35. Traders should monitor for a confirmed break below recent supports and manage risk diligently by respecting the key invalidation level above 175.00. The reaction at the 172.40 target zone will be crucial for determining whether the decline extends towards the 171.35 objective.
Chart Source: TradingView
Disclaimer: This analysis is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. All trading and investing involves significant risk, including the possible loss of your entire investment. Always conduct your own research (DYOR) and consider seeking advice from an independent financial professional before making any trading decisions.
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