EURJPY Price Forecast: Key Support Break Imminent
Muhammad Faraz 
EURJPY Price Forecast Key Support Break Imminent
EURJPY’s price has been declining and is now consolidating at a critical support zone around 177.500. This price action suggests a bearish bias is dominant, with a high probability of a further breakdown. Our analysis projects a move towards a primary target of 177.420, with an intermediate target at 177.990. This prediction is based on a confluence of technical factors, including the breakdown from a previous consolidation and the test of a historically significant support level.
Current Market Structure and Price Action
The current market structure is bearish, characterized by a series of lower highs and lower lows. The price has recently broken below a previous consolidation area and is now interacting with a strong support zone between approximately 177.500 and 177.300. Recent price action shows a clear rejection from higher levels and a sustained move downward, indicating that selling pressure is overcoming buying interest. A decisive break below this support zone would confirm the bearish momentum and likely trigger the next leg down.
Identification of the Key Support Zone
The most critical technical element is the Strong Support Zone identified on the chart, roughly between 177.500 and 177.300. The strength of this zone is derived from:
- Historical Significance: This level has acted as a major swing low and a consolidation area on multiple occasions throughout early November, as visible on the provided chart. Each touch has resulted in a temporary bounce, cementing its importance.
- Technical Confluence: The zone aligns with a key psychological level (177.500), adding to its significance in market psychology.
- Market Psychology: This area represents a point where the sentiment of buyers is being tested. A failure to hold here would signal a significant shift in momentum from the bulls to the bears.
This confluence makes it a high-probability level for a decisive reaction, and in this case, we are anticipating a bearish break.
Technical Targets and Rationale
Our analysis identifies the following price targets, which are your predictions:
Intermediate Target (PT1): 177.990
This level represents an initial measured move target and a minor psychological level. It is the first logical stopping point following a break of the strong support zone.
Primary Target (PT2): 177.420
This is our primary bearish target. It represents a more significant historical support level from early November and aligns with the projected culmination of the current bearish impulse wave.
Prediction: We forecast that the price will break below the strong support zone at 177.500 and move towards our intermediate target at 177.990. A sustained bearish move beyond that would then open the path towards our primary target at 177.420.
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 recent consolidation high, which would be above the 178.500 level. A move back into this range would indicate a failure of the bears to maintain control and a potential false breakdown.
- Position Sizing: Any short positions taken should be sized so that a loss triggered at the invalidation level (e.g., above 178.500) 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:
- Factor 1: The monetary policy divergence between the hawkish European Central Bank (ECB) and the ultra-dovish Bank of Japan (BoJ) remains the core driver for this pair.
- Factor 2: Risk sentiment in global markets can cause volatility in JPY pairs, with safe-haven flows into the Yen potentially accelerating bearish moves in EURJPY.
- Factor 3: Recent economic data from the Eurozone has shown signs of weakness, which may be limiting the Euro’s upside potential against all counterparts.
These factors contribute to a cautiously bearish sentiment surrounding the asset in the short term.
Conclusion
EURJPY is at a technical inflection point. The weight of evidence suggests a bearish resolution, targeting a move first to 177.990 and then to the primary target of 177.420. Traders should monitor for a confirmed daily close below the 177.300-177.500 support zone and manage risk diligently by respecting the key invalidation level above 178.500. The reaction at the 177.420 target zone will be crucial for determining whether the bearish trend will extend further.
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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