EURJPY Recovers as False Breakdown Signals Potential Upside

In today’s technical analysis, let’s take a closer look at EURJPY, where the market is attempting to recover after several days of downside pressure. The new week started with a strong Japanese yen, which pushed EURJPY lower on Monday, and that pressure continued into Tuesday, especially during the second half of the session. However, Wednesday’s Asian session and the early European hours brought a noticeable shift, with the yen weakening and the pair staging a rebound. This change in momentum suggests that selling pressure may be losing strength.

From a technical perspective, the price action is forming a compelling setup. EURJPY has been moving within a wedge formation marked by red lines, a structure that often appears during corrective phases. During the Asian session, price briefly broke below the lower boundary of this wedge, but that move quickly failed. This false breakout to the downside is an important signal, as it often points to a move in the opposite direction. The quick recovery back above the wedge indicates that sellers were unable to maintain control and that buyers are starting to step back in.

That said, a proper buy signal is not active yet. For bullish sentiment to fully take over, EURJPY needs to break above the upper line of the wedge, which would confirm the end of the bearish correction and open the door for another bullish wave. As long as price remains above the key orange horizontal support, the outlook stays cautiously positive. A daily close below this support, however, would invalidate the bullish scenario and turn the sentiment negative again, bringing a renewed signal to sell.

Source: https://www.axiory.com/analytics/technical-analysis/eurjpy-recovers-as-false-breakdown-signals-potenti