EURJPY rallied aggressively on Tuesday, momentarily surpassing the 128.00 psychological level and roughly 1.0% on the day to pause the previous downtrend movement. However, some technical indicators continue to send bearish signals, suggesting that the strengthening of the market may be over soon.
The RSI and the stochastics have both weakened, with the former dropping below 70 and the latter moving lower after the green %K line and the red %D line posted a bearish crossover – this is a negative signal in the very short-term. The MACD oscillator, though, is heading higher above its red-trigger and zero lines in the 4-hour chart.
Over the last hour, the price dipped below the 38.2% Fibonacci retracement level of the downleg from 131.97 to 124.90, around 127.60. The next immediate support could come from the 23.6% Fibonacci of 126.55, which holds just below the 20-period simple moving average (SMA).
On the upside, a run above 128.00 would reinforce the upside correction mode and may challenge the 50.0% Fibonacci near the 128.50 resistance barrier. More advances could drive the pair towards the 61.8% Fibonacci mark of 129.27.
Overall, EURJPY has been positive since hitting an almost three-month low of 124.90 on August 15. The near-term positive tendency is expected to remain as long as price action takes place above the 20- and 40-SMAs.
