EURJPY Top-Down Analysis

Hello Traders,

Here is the Top-Down Analysis of EURJPY (Monthly, Weekly, Daily for direction and 4H for entry) for

Week 45 - Nov 02

M > Market is moving in a triangle. It moved up to test monthly resistance that coincides with monthly supply zone and resistance of triangle trend-line. We saw a W formation and price dropped to test its neck and complete the formation. This level also coincided with 0.382 Fib level on last monthly bullish impulse and 0.618 Fib level on weekly impulse.

W > We saw an M formation and as expected price moved up to test its neck and complete the formation. Price in fact moved further up to test weekly support and faced rejection.

D > Price created a double top at daily supply zone and is now dropping in its bearish move. We can see an M formation and expect price to reverse to test its neck and complete the formation before continuing with bearish move. We can see loss of momentum.

As per COT EUR saw closure major Long and few Short, reducing net positions further. EXY however gained strength during the said week but it weakened a lot last week. JPY saw closure of Long and major Short positions improving net positions however N-R added major Long and few Short positions, improving cumulative net positions. Commercials have added both Long and Short positions, bringing their Shirt positions to highest in current year, in effect increasing total open interest in JPY. JXY improved its position during the said week and further improved it last week.
Institutions, since last month, have been reducing their EUR portfolio of Long and increasing Short positions, with about 50K Long positions closed and 11K short positions opened so far. In Long term EUR pairs will go bearish specially EURUSD whereas in short term institutions are building the market for their gains by capturing Short and exiting Long position at higher price. With Institutions currently holding about 217K Long positions against 61K Short, will continue to sway market in short term either way. Hence for all EUR pairs we continue to recommend following short term trend with good risk management.

4H > We currently have bearish trend with price creating LH and LL, however we can see signs of reversal. We expect market to open with downward move till daily demand zone before trend reversal. We can also observe bullish divergence.

Pair Correlation > EURJPY has positive correlation with CHFJPY, CADJPY and AUDJPY.

Thank You
AP17FX