EURJPY increased its bearish bias after falling below the key 122 yen level last week. The pair has been making lower lows and lower highs for the past one year since falling from the peak of 141.04 in June 2015. Prices have been falling in a descending channel to reach a low of 120.81 on Friday, a more than three-year low.
The daily technicals are supporting the bearish view. RSI is below 50 and MACD is below zero. The market is below the 200-day and 50-day moving averages, which are both sloping down. There is risk for further downside towards 120.00. But a key support level to watch out for will be the 61.8% Fibonacci retracement of 94.09 to 149.76 at 115.31.
Alternatively, if prices rise back above 122.00 and break the May 31 high of 124.17 to clear the 50-day moving average resistance, this will pause the downtrend to indicate short term bottoming and bring about a more bullish outlook. Currently prices are testing the 50% Fibonacci at 121.94. Remaining above it is important, otherwise a deeper correction of the 94.09 – 149.76 upleg would shift the longer term bias to bearish.
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