EUR/JPY Price Analysis: Long-term uptrend could remain intact

• EUR/JPY has been in an uptrend for over two years and despite a breakout in July, it may still be intact.
• Ideally, another break below the August lows at 154 would be needed to signal a trend reversal.

The EUR/JPY broke out of the ascending channel it had been in for more than two years at the end of July.

The breakout was a significant bearish signal; it was steeper than the previous uptrend, indicating a possible reversal in the long-term trend.

Despite this, there is not enough evidence yet to confirm a bearish reversal and the price could still recover and rise again, resuming its broad uptrend.

EUR/JPY Weekly Chart

The sell-off from the peak at 170 bottomed at 154 at the level of the 100-week simple moving average (SMA) in blue, an important SMA.

EUR/JPY then recovered, rising back above the 160 level in early August. The week ending August 9 formed a bullish Doji Dragonfly candlestick pattern (shaded circle) that gained confirmation after the following week also closed in green. Since then, however, the price has been widely range-bound.

A break above 163.89 would likely signal a resumption of the dominant multi-year uptrend. From there, the price would likely rise back to the 50-day SMA at 166.00 (not shown), initially.

A break below the Dragonfly Doji low at 154.41 would be needed to signal a likely reversal of the long-term trend. Such a move would likely find support at 151.41 at first, the lows from late July.