EUR/JPY technical analysis: Stays bullish despite retreat from 16-month high

Anthony Charalambous, CFTe XM

EURJPY managed to preserve its strongly bullish bearing after finding a foothold at the rising blue Kijun-sen line around 124.42. The pullback from the 126.80 peak seems to be neutralized from the recent positive traction above the red Tenkan-sen line, boosted by a bullish crossover in the simple moving averages (SMAs).

The MACD, in the positive area, is below its red trigger line but seems is looking to reclaim it. The RSI has remained above the 50 mark for some time now and is currently improving from this threshold. Moreover, the stochastic %K line bounced off the 20 level completing a bullish crossover of the %D line, endorsing further advances.

If buying interest intensifies, the pair could initially jump towards the 16-month peak of 126.80 before turning its focus to the 127.49 obstacle from March 2019. Continued gains may then meet the 128.32 level, which is the 176.4% Fibonacci extension of the down leg from 124.42 - 119.30. Extending above this, the 129.24 key resistance from December 2018 may halt the climb.

If sellers take control, first support may develop from the 124.42 low coupled with the blue Kijun-sen line. Dipping below this, the 123.87 mark being the 23.6% Fibonacci retracement of the up leg from 114.42 - 126.80, could obstruct the pair from testing the 50-day SMA at the 123.00 trough. Failing to halt the decline, the pair may meet the 38.2% Fibo of 122.09 before challenging the fortified support section from 120.25 - 120.61. This zone includes the 50.0% Fibo and the bullish cross between the 200- and 100-day SMAs.

Concluding, in the short-term timeframe a strongly bullish structure has formed and is secure above 124.42 and the SMAs.

Author

Anthony Charalambous, CFTe

Anthony Charalambous joined XM in 2019 and specializes in preparing daily technical analysis, using his years of trading experience to provide detailed forecasting for all major asset classes such as forex, indices, commodities and equities.

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