EURJPY: Potential for Correction
The recent increase in EURJPY reached only 90 pips after approaching the resistance level, indicating a potential concern. The price movement appears to be finding balance after the previous spike, as shown by the formation of a bearish candle. This suggests an early sign of a possible correction. Although not yet significant, the presence of the bearish candle may signal that selling pressure is starting to increase, particularly around the previously tested resistance area. This response is natural in market dynamics that often react to supply and demand pressures.
Engulfing Pattern and Trend Channel
Currently, the price pattern shows an attempt to form an engulfing pattern, which is often a signal of a reversal, but further confirmation is needed. Considering the trend channel, the price still exhibits an upward trend, suggesting that the market sentiment is not entirely bearish. Conversely, buying pressure may remain dominant if the price fails to break through critical support. The combination of the engulfing pattern and the rising channel trend creates an interesting situation for traders to monitor the next critical point
Parabolic SAR Indicator
The Parabolic SAR indicator is now starting to move away from the price, reflecting the impact of yesterday's rally. The SAR moving away may suggest that the upward momentum is starting to weaken, but it has not completely disappeared. In this situation, we should be cautious about the possibility of a larger pullback or reversal if the bearish momentum continues to strengthen.
Moving Average and Trend
The Moving Average is showing signs of a steady increase, indicating that the overall trend remains bullish, even though the price is currently in a consolidation phase. However, the distance between the price and the Moving Average is still relatively large, which can create challenges. In such cases, it's often better to wait for the price to approach the Moving Average as a stronger entry signal. If the price continues to move away from the Moving Average without any reversal, the opportunity to add long positions may be more limited.
Donchian Channel and Volatility
The Donchian Channel indicator shows a narrowing in the high and low ranges, reflecting a decrease in volatility after a previous significant increase. In this type of market condition, the market is usually waiting for a new catalyst to determine the next direction. This period often signals an impending significant change. People who are perceptive commonly use this opportunity to get ready to make a move, particularly in regions near key price levels that could influence the market.
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