For over 6 months now the EUR/JPY has been in a down trend taking it from a high in July of 169.97 to a low of 112.10 in January.  But has that trend changed?

Looking at the first chart it would seem so.  It has broken the trend line on the 1% box size point and figure chart and made a higher bottom.  This should indicate it is time to buy right?

EUR/JPY

Taking a look at the chart on a longer term view showing the uptrend that took the pair all the way to 169.97 you will see that 2 times the trend line was broken but continued higher.  It was basically a fake out.  Is this recent trend line break a fake out or is this the real thing?

Using the 21 column exponential moving average (EMA) on this chart helps us in determining the validity of the trend line break.  You can see that both times on the way up each time the trend line was broken there was never a sell signal given below the 21 ema.  Once we had both the trend line break and a sell signal below the 21 EMA that confirmed that the trend change really had taken place.

EURJPY

You will also notice that each time the trend line was broken but ended up being a fake out it never made more than one sell signal below the trend line break.

So what does this mean?  Has the trend changed or not?

If we see a the EUR/JPY make a second buy signal above the trend line and a buy signal above the 21 EMA that will be enough confirmation to say the trend has officially changed.  Until then lets wait and see if this really is the start of a trend change or if it is just a fake out and the chart continues in its move down.

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