EUR/JPY advances inside Ichimoku cloud; descending channel holds.
EUR/JPY is trading higher in the 4-hour chart after it posted a bullish cross within the 20- and 40-simple moving averages (SMA). The RSI indicator is pointing to the upside in the bullish area, while the MACD oscillator is trying to strengthen its momentum above the trigger line. Currently, the pair remains within the Ichimoku cloud as the red Tenkan-Sen line and the blue Kijun-Sen line are signaling flat movement in price action.
However, if the market continues the upside movement in the near term, the pair could touch the upper band of the Ichimoku cloud around 125.30 and the 23.6% Fibonacci retracement level of the up leg from 118.57 to 127.50, near 125.37. In case of a higher extension, the price could challenge the 126.15 level taken from the highs on March 22, penetrating the descending channel to the upside.
In the alternative scenario, if the market pushes the pair lower, the price could rest near the immediate support of 125.00. More declines could also meet the 20-SMA and then the 40-SMA currently at 124.70 and 124.55 respectively. An aggressive run below these lines could open the door for the 38.2% Fibonacci of 124.10.
In the longer timeframe, the price remains in a bearish channel following the pullback on two-and-a-half-month high of 127.50, and only an advance above this level could bring the bullish outlook back into play.
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