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EURJPY: a false bearish breakout

This piece is about EURJPY, where the first several hours of the new week brought us a proper upswing. That was not entirely expected to be honest, especially on Friday, as the price closed the previous week on the weekly lows.

On Monday, traders decided to ignore this fact and made a proper reversal, which actually created a false breakout pattern (orange). False breakouts are usually strong signs to open the opposite trade (and we mention that very often) and this is precisely what is happening now. EURJPY came back above the mid-term upwards trend line (red), which cancels the bearish sentiment. We are currently very close to a breakout of the long-term downwards trend line (blue) along with the green horizontal resistance, which in theory should bring us a proper buy signal. In this case, the only way we will have a legitimate trigger to go long is if the price closes the day above the green area.

To sum up, for now it's best to be patient. According to my understanding of price action, there is currently no signal here. There should be one very soon though! Better to be safe than sorry, so we recommend waiting for additional confirmation before making any decision.

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