EURJPY briefly jumped higher early on Wednesday but the rally stopped just below the 50-day moving average, which is acting as a strong resistance level around 114.55. Immediate support lies at 112.35, which is the August 8 low.
EURJPY is expected to remain within a range of 112.35 and 116.00 in the short term. The flattening 50-day moving average is an indication that the market is likely consolidating in this area. RSI remains below 50 in bearish territory and suggests that upside momentum in the market is limited.
The market is maintaining the underlying bearish market structure. The longer term downtrend that started from the June 2015 high of 141.04 is still in place and there is no sign of a reversal yet. A break out of the range to the downside will target the multi-year low of 109.36 (from June 24) and would strengthen the downtrend.
Alternatively, a break above 116.00 would open the way to the next important resistance at 118.50. Only a break above 122.00 would weaken the bearish market structure and start to shift the bias to a more bullish one.
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