EUR/JPY is on course for a strong session after the rebound on the 128.30 support, in the 4-hour chart. This week, the pair has been on the backfoot and the technical indicators suggest that the market could ease a little bit in the short-term. The Relative Strength Index (RSI) is pointing to the downside in the negative zone, strengthening its momentum, while the %K line of the stochastic oscillator is ready to create a bearish cross with the %D line.
If prices are able to continue to move lower the next support for traders to watch is the 128.20 barrier. Even lower, the pair could meet the 127.90 level, taken from the low on September 10, while a drop below this level would open the way towards the 126.60 level.
However, if the market manages to turn to the upside and breaks above the 23.6% Fibonacci retracement level of the down-leg from 133.10 to 128.20, around 129.36, the price could jump until the 38.2% Fibonacci mark of 130.07. Slightly above this level, the price could hit 130.20 before challenging 130.50, identified by the high on October 12.
Looking at the near-term picture, at the 4-hour chart, EUR/JPY has been trading within a short-term downtrend over the last month after the price bounced off the 133.10 resistance level.
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