EUR/JPY Candlesticks and Ichimoku Analysis

As the single currency has remained under pressure after breaking support at 126.95 and indicated downside target at 124.39 has been met and price dropped to as low as 121.57 yesterday, bearishness remains for further subsequent weakness to 120.28 (1.236 times projection of 138.49 to 126.95 measuring from 134.54) is likely, however, oversold condition should limit downside and reckon 118.00 would hold.

On the upside, whilst recovery to 124.30/40 cannot be ruled out, price should falter well below resistance at 126.95 (previous support turned resistance) and bring another decline to aforesaid downside target later. In the event euro breaks above said resistance, then stronger rebound towards the Tenkan-Sen (now at 127.98) would follow but only a weekly close above this line would signal low has been formed, then stronger rebound to 129.97-130.09 (current level of the lower Kumo and Kijun-Sen) would be seen.

On the daily chart, despite recovering to 126.98 earlier this week, as the single currency fell again after failing to break minor resistance at 127.08 and price tumbled to as low as 121.57 yesterday on massive risk aversion, bearishness remains and break of said support would extend weakness towards 120.85 (61.8% projection of 134.37 to 124.45 measuring from 126.98 and possibly 120.28 (1.236 times projection of 138.49 to 126.95 measuring from 134.54) but 119.00 is likely to hold on first testing.

On the upside, as euro has recovered from 121.57, suggesting consolidation would be seen and minor correction towards 123.00 and possibly towards 124.45 (previous support turned resistance) cannot be ruled out, however, the Tenkan-Sen (now at 124.97) should attract renewed selling interest, bring decline to aforesaid downside targets. Only a daily close above the Tenkan-Sen would suggest a temporary low is possibly formed and risk retracement to 126.00 but resistance at 126.98-127.08 should hold.