Euro to Japanese Yen Faces Critical Test of Neckline Resistance

In today’s technical analysis, there’s an intriguing development on the Euro to Japanese Yen (EUR/JPY). Over the past three days, the pair has formed a head and shoulders pattern, marked in yellow, and today, we see a breakout of the neckline, marked in blue, indicating a potential sell signal. However, a sharp V-shaped reversal is currently testing this broken support as resistance.

As of now, the neckline is holding, suggesting a negative sentiment if the price remains below this level. Should the price reclaim the blue area, it would indicate a false breakout and a buy signal. Given the current dynamics, a further decline seems slightly more probable, targeting the lows from June 4th, marked by the orange area.

The breakout from the head and shoulders pattern and the subsequent price action provide critical levels to watch. Traders should be vigilant for sustained moves either below the neckline, confirming the sell signal, or a reversal above the blue line, indicating a buy based on a false breakout. This setup is essential for making informed trading decisions on EUR/JPY.

Source: https://www.axiory.com/analytics/technical-analysis/euro-to-japanese-yen-faces-critical-test-of-neckli