EUR/JPY has moved considerably higher following the rebound on the two-month low of 126.60 in the previous week. This week the pair has been higher, and the technical indicators are confirming the recent upside movement. The stochastic oscillator jumped into the overbought zone, while the MACD entered the positive territory with weak momentum.
If prices are able to continue to move higher the next resistance for traders to watch is the 38.2% Fibonacci retracement level of the down-leg from 133.10 to 126.60, around the 129.00 handle, which stands near the short-term descending trend line. Even higher, the pair could meet the 50.0% Fibonacci of 129.90, while a jump above this level would open the way towards the 130.20 level.
However, if the market manages to turn to the downside again and breaks below the 23.6% Fibonacci of 128.15, which coincides with the 40-simple moving average (SMA) in the 4-hour chart, the price could slip until the 20-SMA near 127.90, at the time of writing. Below this level, the price could hit the 127.25 support barrier.
Zooming into the near-term picture, in the 4-hour chart, EUR/JPY has been trading within a short-term downtrend over the past months after the price bounced off the 133.10 resistance level.
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