Keeping an eye on the 5- minute for intraday clues
Yesterday, the EURJPY toyed with a trend line on the hourly chart AND the 200 hour MA (see post from yesterday HERE). The price fell below each technical level twice but could not sustain any downside momentum. As a result, the price rallied into the early hours of the Asia Pacific session.
Then the BOJ trimmed the bond purchases and the price action led to a fall back below the two technical levels again. This time, the sellers were more committed. The break was supported by momentum (see 5-minute chart below). The price has been trending lower.
What now?
When the market trends, trending can beget trending. It is important to listen to the price action to make sure sellers are keeping in control and conversely, the buyers are feeling the pressure.
To see that, I like to look at the 5-minute chart.
Looking at that chart above, the pair has been tracking the 100 bar MA (blue line). On a couple corrective moves today, the price did squeak above the MA line (blue line in the chart above) but stalled shortly thereafter. Moreover, the pair started to pay attention to the downward sloping trend line.
That trend line and the 100 bar MA and trend line will help define the bias (at 134.47 and 134.559). Stay below is more bearish. The trend lower can continue as the buyers are still feeling the pain.
Move above those levels, and the market is more balanced at this area. The trend move may look to transition to a more consolidative/corrective phase. Buyers can breathe a little easier. Shorts/sellers may start to think about taking profit.
The trend line cuts across at 134.47 and the 100 bar MA comes in at 134.559 and both are moving lower.
SUMMARY: Sellers are trending the EURJPY lower and the bias lines are in place. Stay below and the trend can keep running.