FX.co ★ Short-term analysis and trading recommendations on EURJPY.

EURJPY is in a bullish trend making higher highs and higher lows. Price has formed and upward sloping wedge pattern that clearly defines the boundaries of the move and helps us identify promptly any change in trend. With the recent new higher high in price we also have our second warning by the RSI.

Red lines - bearish divergence

Despite making new higher highs, the RSI has not followed. Instead we see another bearish divergence which is an important warning signal. Support by the lower wedge pattern is at 131. However with price very close to the upper wedge boundary, I believe this is the time to turn bearish or at least liquidate long positions. Breaking below 131 will confirm the trend change we expect to see soon. If price continues higher and the RSI also breaks the red trend line and moves above 71.28, then our bearish trade setup will be canceled.