EURJPY is neutral in the near term and has traded in a range between 132 and 133 since September 25. Trend indicators and momentum oscillators are not showing any clear trend and are mostly flat, highlighting the neutral bias in the market.
Based on Ichimoku cloud analysis on the 4-hour chart, the cloud, as well as the Tenkan-sen and Kijun-sen lines, are all moving sideways. The RSI and MACD oscillators are flat, also pointing to a consolidation phase for EURJPY.
The lack of momentum in the market suggests that downward pressure has eased following a drop from 134.40. This peak was the highest since November 2015. The market has retraced 38.2% of the recent rally from 129.36 to 134.40. More signals are needed to show whether this recent pullback is just a corrective move before resuming the uptrend or if it is the beginning of a new downtrend.
Only a move back above 133 would indicate that risks to the downside have diminished. The 23.6% Fibonacci is also a resistance level at 133.20, which if breached, could lead to further gains towards the 134.40 peak. Extending above this point would see a resumption of the broader uptrend.
There is important support at 132 and at the 50% Fibonacci at 131.86. If the current consolidation phase breaks down and prices move to the downside, then the 61.8% Fibonacci at 131.27 will be the next target and from here the key 130 level is within sight as a key focus.
The neutral bias is expected to hold in the near term due to lack of any momentum in the market. While the broader bull trend has only been reversed by less than 50%, further weakness in EURJPY cannot be ruled out completely as the RSI is below 50 and pointing downwards on the 4-hour chart. Meanwhile, prices have been drifting lower in the past couple of trading sessions.
