InvestMate|EUR/JPY Outlook Update💶💴💶💴EUR/JPY Outlook Update
💶💴This is yet another post in which I will try to give a more detailed presentation of my downside scenario on this pair. Because I think that price is still expensive.
💶💴Beginning with the fundamentals:
💶Looking at economic growth in the Eurozone we are at levels of 2.1% This is quite average looking at the past.
💴Compared to Japan where we are currently at 1.6% this is also quite average looking at past periods.
tradingeconomics.com
💶 Unemployment in the Eurozone is falling - the latest reading on 3 November showed a drop to 6.6% compared to last reading of 6.7%.
💴 In Japan, on the other hand, unemployment rose from 2.5% to 2.6%.
💶 A week ago, on 17 November to be precise, the inflation reading, which was 10.7% on 31 October. The market is betting on a slowdown in inflation in the coming months.
💴 In the case of Japan, inflation is gaining momentum even though we have maintained a 3% growth the market is betting that during the next data due on 17 November we could break this barrier and rise to levels of 3.2%.
💶 Eurozone interest rates were raised by 75 basis points at the last council meeting on 27 October to 2%.
💴 In Japan, of course, no change, the council kept rates at -0.1% at its last meeting, but with inflation gaining momentum, further moves remain uncertain. For now, the market is pricing in an unchanged rate at the next decision on 22 November.
💶💴 Now that we know the fundamental environment, let's turn to the chart.
💶💴I will present all the tools I used in turn:
💶💴1 I have plotted the uptrend channel from the start of the strong breakout to the top.
💶💴2. I measured with a fibo grid the entire upward wave.
💶💴3. I measured the last downward impulse using the fibo.
💶💴4. I measured the largest downward correction in the entire upward impulse to determine the extent of the 1:1 correction.
💶💴5 I determined two support zones.
💶💴(1) Based on the 1:1 level of the largest downward correction and the 0.5 level of the entire upward impulse.
💶💴(2) Based on the 0.618 level and the previous strong price reactions, from this point the price made a rise to new peaks.
💶💴6. I determined a resistance zone based on the 0.5 level and where price has reacted in the past.
💶💴The scenario I am playing out is a final descent to the 0.618 levels of the entire downward wave.
💶💴*Please do not suggest the path I have drawn with lines this is only a hypothetical scenario for further increases.
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