EUR/JPY turns lower after creating double top formation at 126.80.
EUR/JPY is trading lower after it faced a double top formation on the 126.80 resistance level on April 15 and April 17. The price is challenging today the 50.0% Fibonacci retracement level of the up leg from 123.65 to 126.80 around 125.20, posting a new two-week low.
The successful fall below the 20- and 40-simple moving averages (SMAs) and the red Tenkan-Sen line gives the opportunity to traders to think about potential bearish actions in the near term. The RSI is heading towards the oversold level, while the MACD declined below its trigger line.
A close below the 50.0% Fibonacci of 125.20 would boost bearish sentiment, shifting attention straight down to the 125.00 level. A drop below this line could increase downside momentum until the 61.8% Fibonacci of 124.83 and the 124.75 support.
In the alternative scenario, the price could find a hurdle at the 38.2% Fibonacci, which overlaps with the 125.60 resistance. A jump above this hurdle could drive the pair to rest near the 20-simple moving average (SMA) currently at 125.70 in the 4-hour chart, ahead of the 23.6% Fibonacci of 126.05 and the 40-SMA.
Overall, EUR/JPY has been developing in a bearish correction following the pullback on the double top. A repetition of the upside tendency would come if the price surpasses the 126.80 resistance.
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