FX.co ★ EUR/JPY: flag pattern to be confirmed

The EUR/JPY pair rebounded today and erased some of yesterday's drops. Still, the bounce back could be only temporary. The rate could drop again after reaching the immediate resistance levels. Technically, the price action develops a bearish pattern which needs to be confirmed. It's located at 157.75 at the time of writing.

After the last massive drop, a rebound was natural. The Euro could lose ground again versus its rivals after the Eurozone and the German Flash Manufacturing PMI and Flash Services PMI reported contraction. In the short term, the Jackson Hole Symposium could have a big impact on the Japanese Yen as well.

EUR/JPY Rejected By A Confluence Area!

As you can see on the H1 chart, the rate rebounded within a minor up channel. The flag pattern could announce a downside continuation. Now, it has reached the confluence area formed at the intersection between the 158.04 and the median line (ml).

The flag's support and the former low of 157.40 represent key downside obstacles. As long as it stays below 158.04, the currency pair could drop again.

EUR/JPY Outlook!

Dropping and closing below 157.40 and under the S1 (157.31) is seen as a selling signal.