FX.co ★ jerome82 | EUR/JPY

Yesterday evening brought a turbulent trading session for the pair, as the price first broke out of the descending channel boundaries, only to return back this morning, leaving traders at the 161.00 level in complete uncertainty. This false breakout only emphasized the strength of the current bearish trend, leaving a long wick candle as a monument to the failed bullish breakthrough. Technical indicators persistently signal sales. The Awesome Oscillator consistently shows deepening red bars, demonstrating growing bearish strength. The RSI, hovering around 40, avoids any hint of oversold conditions, leaving room for further decline. Particularly concerning is the behavior of the MACD - its histogram is making new lows, while the indicator lines diverge, reinforcing the bearish signal. Key levels have acquired new significance after yesterday's jumps. The support at 160.02 now becomes a "line of life" for the bulls - a breach of it could open the floodgates for a deeper correction. The resistance at 164.14, far above current levels, reminds us of how much the pair has lost over the last few sessions. Special attention should be paid to the 161.50-161.80 zone - this is where the upper channel boundary lies, which became an insurmountable barrier during yesterday's false breakout. The trading behavior raises serious questions. Yesterday's volatility spike left a candle with a long upper wick - a classic sign that any attempt to rise is immediately met with aggressive selling. Meanwhile, volumes on the decline remain consistently high, confirming the seriousness of bearish intentions. Corrective pullbacks appear sluggish and short-lived, rarely exceeding 50 points. The fundamental background adds fuel to the fire. The difference in monetary policies between the ECB and the Bank of Japan continues to weigh on the pair, and yesterday's political events only heightened the instability. The pair could be particularly sensitive to any unexpected statements from Frankfurt or Tokyo - the slightest hints of a change in policy direction can trigger new sharp movements. The current situation requires extreme caution. A false channel breakout often heralds either a continuation of the trend with renewed strength, or the formation of a complex corrective structure. It will be especially important to monitor the price action at the 200-day moving average - a sustained breakout on increased volumes could signal an intensification of bearish pressure with targets in the 158.00-159.00 zone. At the same time, given the increased volatility, one should be prepared for sharp, albeit short-lived, countertrend movements.