“Death Cross” on the EUR/JPY

The death cross is formed when the 55 day EMA (purple line) crosses below the 200 day EMA (blue line). It is called the death cross, because it has bearish implications for the instrument in the mid-term. The cross is not considered an entry signal, because normally when the cross is confirmed, the instrument is already over-extended to the downside and ready for a possible bullish pullback or retracement. None the less, the cross lets traders know that the bearish trend may continue in the mid-term, regardless if there is a pullback or not. On the daily chart of the EUR/JPY we can see that a death cross has been confirmed and we may see a breakdown of the 116.00 level. The pair may try to reach the 115.00 level, especially if the risk aversion in the markets continues and the Yen keeps rallying versus its main counterparts. But if the pair bounces to the upside, then its first resistance zone may be the 117.00 level, followed by the 118.00 level or the 119.00 level.