EURJPY is diving back below the near-term falling trend line and the 38.2% Fibonacci retracement level of the down leg from 124.40 to 144.25 at 136.75. The neutral to bearish picture in the short-term looks to last for a while longer after prices failed to break above the descending line and the 138.40 resistance.
The negative bias in the near term is supported by the deterioration in the momentum indicators. The %K line of the stochastic oscillator has fallen sharply after the pullback from the overbought region and posted a bearish crossover with the %D line. The RSI is flatlining below the 50-neutral level, suggesting any upside correction will be weak.
If prices continue to head lower, support should come from the 134.90 barrier before tumbling to the 50.0% Fibonacci of 134.30 and the 200-day simple moving average (SMA) at 134.07. A drop below these lines would reinforce the bearish view and open the way towards the 132.60-133.40 support zone.
However, should an upside reversal take form, immediate resistance will likely come from the 38.2% Fibonacci of 136.75 ahead of the 40-day SMA at 138.40. A break higher could shift the bias to slightly bullish with the next resistance coming from the 23.6% Fibonacci of 139.55.
All in all, EURJPY has been neutral to bearish in the short-term timeframe and any moves beneath the 200-day SMA would endorse the bearish scenario.
