EURJPY changed course near the strong ascending trendline once again, reversing northwards to re-challenge its recent peaks.
The squeezing Bollinger bands are flagging that volatility is currently at low levels, but a significant advance or decline could develop in the subsequent sessions. Whether the next action could be up or down, the momentum indicators continue to favor upside movements as the RSI is sloping upwards above its 50 neutral mark, the Stochastics is also strengthening towards the overbought territory, and the MACD, although below its red signal line, has showed some improvement the past few days.
Should the bulls speed up beyond the top of 130.96, the door would open for the 132.00 level and the upper resistance line seen around 132.40. Crawling higher, the 133.00 number could next come under the spotlight.
If the bears take the wheel, all eyes will turn to the ascending trendline at 129.65, where the 50-day simple moving average (SMA) is currently located. Breaking that floor, traders may seek support somewhere between 128.75 and 128.28, with the former being the 23.6% Fibonacci retracement of the 121.60 – 130.92 up leg and the latter the low from March 24. Not far below, the 38.2% Fibonacci of 127.38 could also attempt to stop the sell-off, saving the market from an outlook deterioration in the medium-term timeframe.
In brief, the technical picture is currently reflecting a positive bias for EURJPY, also foreseeing more volatile sessions in the short term.
