One of the most common mistakes retail traders make is trying to trade against the prevailing trend, and in general, I strongly discourage that approach. Statistically, trend continuation is far more likely than reversal. That said, there are moments when the market starts to build a technically valid reversal structure, and one such situation is currently developing on the euro versus the Japanese yen.
On the daily chart, we can clearly observe a triple top formation. Last Friday was particularly telling. Price pushed intraday to new long-term highs, but that breakout attempt failed sharply, followed by a strong rejection and a deep sell-off into the close. Today’s Monday open added to that weakness, with price opening lower and continuing to drift south.
At the moment, EUR/JPY is trading directly on a very important support level. This level is defined by the black neckline that connects the lows of the triple top formation. This neckline represents the last meaningful support for buyers within this structure.
A key requirement when trading triple top or triple bottom formations is the presence of momentum divergence, typically on indicators such as MACD or RSI. In this case, that condition is clearly met. While price was making higher highs, MACD failed to confirm those highs, creating a bearish divergence. This divergence is an early warning signal and an invitation to start looking for short opportunities rather than chasing further upside.
However, it is important to stress that the sell signal itself has not yet been triggered. That will only occur once price breaks decisively below the black neckline. As long as EUR/JPY remains above this level, buyers are still defending the structure. A clean breakdown would confirm the reversal and open the door for a broader bearish move, while a successful defense would keep the dominant uptrend alive.