EUR/JPY re-enters its bullish channel [Video]

EURJPY bounces back after 200-day SMA prevents decline.
Rejoins its bullish setup in place since summer.
Momentum indicators are within their positive territories.

Stefanos Oikonomidis XM

EURJPY has been on the rise again after a period of weakness in which the price dropped below its bullish channel established in June. The rebound has been largely attributed to the pair’s repeated inability to violate the 200-day simple moving average (SMA).

Should buying pressures persist, the price may revisit the January high of 161.85. A break above that area could pave the way for the 15-year high of 164.28. Failing to halt there, the pair could storm higher to fresh multi-year peaks, where the October 2007 high of 167.72 could curb any upside attempts.

On the flipside, if the price reverses lower, immediate support could be found at the previous resistance of 159.75, which overlaps with the lower bound of the ascending channel. Further retreats may then cease around 157.93, a region that acted both as resistance and support in recent months. Even lower, the October-December support of 154.34 could act as the next line of defence.

In brief, EURJPY managed to pause its short-term selloff with some help from the 200-day SMA and jump back above the Ichimoku cloud. Therefore, the technical picture will remain positive for as long as the price holds within its medium-term bullish pattern.

Author

Stefanos Oikonomidis

Stefanos joined XM as a Junior Investment Analyst in September 2021. He conducts daily market research on the currency, commodity and equity markets, from a fundamental and a technical perspective.

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