EURJPY was overwhelmed by buying interest yesterday that thrusted the pair back above the 100- and 50-day simple moving averages (SMAs). Yet, advances hit a wall and the pair now seems to be steering into a more sideways structure. The minor upward inclines of the 100- and 200-day SMAs are preserving the positive picture, while the falling 50-day SMA promotes negative sentiment.
The short-term oscillators also reflect the pair’s recent freeze in positive momentum. The MACD, in the negative region, has pushed above its red trigger line but stands just beneath zero, while the RSI has paused advances in the bullish zone. Yet, the positively charged stochastic oscillator continues to transmit signs of improvement in the price.
To the downside, immediate support may develop from the converged 50- and 100-day SMAs around 123.82 ahead of the 123.18 mark, which is the 50.0% Fibonacci retracement of the up leg from 119.30 to 127.06. Dipping lower may test the 61.8% Fibo of 122.25 prior to the key trough of 121.61. Sinking past this, the 76.4% Fibo of 121.13 – merged with the 200-day SMA – may attempt to prohibit further negative moves.
Alternatively, heavy resistance from the 125.00 handle until the 23.6% Fibo of 125.23 may try to mute another climb. Failing to curb advances may send the price towards the 126.45 high ahead of the 126.80 obstacle and the adjacent multi-month peak of 127.06. Piloting over this too and past the 127.49 peak from March 1 of 2019, the price may reach the 128.32 level, that being the 176.4% Fibonacci extension of the down leg from 124.42 to 119.30.
Summarizing, EURJPY appears to be confined between the boundaries of 121.61 and 125.23. Initial direction in the pair may be revealed with a break either above 125.23 or below 123.82.
