EURJPY has the potential to repeat last week’s exciting bull run, executing another acceleration to a new 7½-year high of 142.00 early on Tuesday.
Having already charted eight consecutive green days and three months of gains, some depreciation would be normal in the coming sessions, especially as the RSI and the fast-Stochastics smoothly sail in the overbought territory. With the price having closed marginally above the upper Bollinger band over the past three days, the odds for a downside correction are growing larger. Nevertheless, given the persisting positive momentum in the MACD and the upward slope in the RSI, which is just entering the overbought zone and has yet to reach its former resistance zone, there might be some room for improvement before the next bearish round takes place.
Advancing above the 142.00 psychological level, the bulls may initially take a breather around the 143.30 barrier taken from November 2014. A steeper increase could get congested within the 144.50 – 145.00 restrictive zone, where the 161.8% Fibonacci extension of the April- May downfall is placed. Notably, a resistance line drawn from February’s peak is passing through this area too.
If sellers take immediate control, the pair may look for a rebound near 140.00, where April’s ascend almost topped. Slightly lower, the 139.10 – 138.62 tight region, which encapsulates the constraining red Tenkan-sen line, could next come to the rescue, preventing an outlook deterioration towards the short-term support trendline and the 20- and 50-day simple moving averages (SMAs) seen at 136.50 – 137.00.
In brief, EURJPY is trading overbought in the short-term picture and its nonstop bullish momentum could motivate some profit-taking in the near term. But before that happens, the pair may print another higher high.
