Nº 7: EURJPY Likely to Test 123.25 Level

A BAT harmonic pattern on EURJPY Weekly chart accurately determined bearish move that started back in February, which may not be over yet.

The 5-point BAT structure completed on 02-Feb-2018 after reaching 0.886XA at 137.505 on EURJPY chart. An immediate strong sell-off followed without any price consolidation in the PRZ.

The downward price movement generated an AB=CD pattern as shown below that crossed 50% retracement of BAT pattern CD leg. The sellers liquidated their short positions immediately on AB=CD pattern completion.

Since then, another AB=CD pattern is forming that may eventually end this medium term bearish correction, which is in progress since February.

Referring to the chart below, the likelihood of price testing the 123.45-123.25 zone is very high as multiple numbers are converging including;

• Completion of AB=CD pattern that is currently in-progress.

• 61.8% retracement of BAT Pattern CD leg.

• Point B of BAT Pattern that was a solid resistance during BAT formation and now may serve as a firm support during bearish correction.

The fundamentals are also suggesting that EUR will remain under pressure during next few weeks as the European banks have a fair bit of exposure to Turkish debt. The situation in Turkey may get worse before it gets better, while JPY is still seen as a safe haven globally.

The entry to play this 250 pips move can be determined on H1 or H4 timeframes as per the trading style. I would be seeking an entry somewhere around 126.0 level with a fairly tight stop-loss.

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