EURJPY is sustaining its upward trajectory above the ascending trendline, currently flirting with the March peaks and the 61.8% Fibonacci retracement of the 2018 – 2020 sell-off around 130.15.
The technical indicators provide a mixture of signals. The Stochastics’ intersection within the overbought area and the bearish cross between the red Tenkan-sen and blue Kijun-sen lines is a negative warning that the bulls are losing energy. On the other hand, the RSI continues to move towards its 70 overbought mark, while the price itself has yet to reach the upper Bollinger band, suggesting that there is more room for improvement.
Given the indecisive mode, traders may remain patient until the pair clearly closes above 130.15, and more importantly, rallies beyond the upper Bollinger band at 130.82. If that is the case, resistance may run up to the 132.00 level.
On the downside, a break below the 20-day simple moving average (middle Bollinger band) at 129.60 will shift the spotlight towards the resistance trendline, the 50-day SMA, and the surface of the Ichimoku cloud. The 23.6% Fibonacci level of the 121.60 – 130.37 up leg is also located in the neighborhood at 128.50, adding more credence to the region. Therefore, any violation at this point is expected to trigger a more aggressive sell-off, likely towards the 38.2% Fibonacci of 127.20.
Summarizing, EURJPY is looking confused as to the short-term directional bias around its March highs, with traders probably waiting for a decisive move above 130.15 or below 129.60 to act accordingly. Yet, any downside correction may not deactivate the upward pattern in the medium-term picture unless the price dives below the supportive trendline and its previous lows.
