EUR/JPY remains under pressure and risk is still to the downside as prices continue to drift lower from the two-month high of 131.97, achieved last week. The short-term technical indicators are neutral to bearish and point to more weakness in the market over the next few sessions.
Looking at the 4-hour chart, prices are looking capped by the 20- and 40-simple moving averages (SMA) which are negatively aligned after a bearish crossover that took place on July 20. The RSI indicator is moving south near the threshold of 30, while the MACD oscillator is flattening near its trigger line and stands below its neutral level.
The bearish phase remains in play if the pair drops below the 129.73 support and under the 129.55 hurdle. Further downside extensions could drive the price towards the 38.2% Fibonacci retracement level of the up-leg from 124.60 to 131.97, around 129.15. Breaking this zone could push the market to the next level of 128.40.
Upsides moves are likely to find resistance at the 20-SMA first and then at the 40-SMA at 130.23 and 130.80 respectively. As a side note, the 20-SMA overlaps with the 23.6% Fibonacci at the time of writing, indicating that is a strong obstacle for the bulls.
Having a look at the medium term, EUR/JPY is still in a falling mode after the bounce off the 131.97 peak and continues to post a bearish correction.
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