The long-term uptrend may still be intact

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

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

The breakdown was a significant bearish sign; was steeper than the previous uptrend, indicating a possible long-term trend reversal.

Despite this, there is still not enough evidence to confirm a reversal lower, and the price could still recover and go higher again, resuming the broad uptrend.

EUR/JPY weekly chart

Selling off the high in the 170s hit a low of 154 at the 100-week blue simple moving average (SMA), a significant major SMA.

EUR/JPY then recovered, climbing back above the 160 level in early August. The end of the week of August 9 formed a Japanese Dragonfly Doji (shaded circle) candlestick pattern that gained confirmation after the following week also closed in the green. Since then, however, the price has largely oscillated within a range.

A break above 163.89 would likely signal a resumption of the dominant multi-year uptrend. From there, the price would likely rise back up 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 long-term trend reversal. Such a move would likely find support at 151.41 early on – the lows since late July.