EUR/JPY has advanced considerably over the last three weeks after the rebound on the 126.60 support level. During yesterday’s trading session, the pair hit a fresh seven-week high of 130.75 and then plummeted until the 20-simple moving average (SMA) in the 4-hour chart. Currently, the market is trying to erase earlier losses as it is set to create the second bullish session in a row.
From the technical point of view, in the 4-hour chart, the indicators are currently supporting that the positive momentum is likely to strengthen in the short-term. Specifically, the RSI is picking up speed to the upside and the stochastic oscillator is turning to the upside.
Should the price close decisively above the 130.75 hurdle, the next resistance to have in mind is the 50.0% Fibonacci retracement level of the down-leg from 137.50 to 124.60, around 131.10. Further advances above this level could then target the area around the 131.37 – 131.60 zone.
On the downside, a decline could meet the 40-SMA, which overlaps with the 128.55 support, also the 38.2% Fibonacci. A slip below this level, the price could retest the 128.40 level, taken from the low on July 2.
Overall, EUR/JPY shifted the bearish outlook to bullish as it jumped above the moving averages. It is worth mentioning that in the daily timeframe the 20-SMA is ready for an upward crossover with the 40-SMA.
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