- EURJPY moves sideways, but technical signals point to more downside
- Support could come near 162.25; bulls need a break above 165.70
EURJPY continued to trade quietly within the 163.00 range for the second consecutive day, but despite the lack of momentum in the price, the technical signals suggest that further downside could be on the horizon.
The pair broke below a key short-term support trendline last week and slipped beneath both its 20-day and 200-day simple moving averages (SMAs), signaling that the bears are regaining control.
The RSI and the MACD are reinforcing the bearish shift in sentiment as the former is pointing down below its 50 neutral mark and the latter is decelerating beneath its red signal line. Likewise, the stochastic oscillator is trending southward, though it has already entered the oversold area below 20, suggesting the market may be ripe for a rebound.
The 162.25 region, which coincides with the 38.2% Fibonacci retracement of the latest upleg, could be the nearest pivot point. Additionally, the 50-day SMA is in the vicinity at 161.90, making this level a key battleground for the bulls and the bears. If the bears stay in charge, selling pressure could intensify toward the 50% Fibonacci mark of 160.90. Then, the focus may turn to the 61.8% Fibonacci of 159.55 and the downward-sloping trendline around 158.77.
On the flip side, if the bulls manage to lift the price back above the 200-day SMA at 164.85, there is a chance for a short-term recovery. However, another significant hurdle may emerge near the tentative resistance line seen near 165.70. A step above this border might be necessary for an advance toward the October high of 166.67 or higher to 167.50. Further up, the rally could take a breather within the 169.00-169.30 zone.
In summary, EURJPY is currently in a bearish posture, with technical indicators and price action favoring further downside in the near term.
