EUR/JPY traded higher during the Asian morning Wednesday, but hit resistance near the 122.00 zone, and during the early European morning, it started drifting south again. Although the pair continues to trade above the medium-term upside support line drawn from the low of September 3rd, for the last week, it’s been printing lower highs and lower lows below a new tentative downside line, taken from the high of January 17th. Therefore, with ample room until it reaches the medium-term upside line, we would see decent chances for the bears to stay in charge for a while more.
A clear and decisive break below the 121.72 barrier could confirm the case and may initially aim for the 121.45 hurdle, marked by the inside swing high of January 7th. If that barrier fails to hold and the rate dips lower, we could then see the sellers driving the battle towards the 121.03 zone, which is defined as a support by intraday swing highs formed on January 8th, or towards the upside line drawn from the low of September 3rd.
Turning our gaze to the short-term oscillators, we see that the RSI, already below 50, has turned down again, while the MACD lies below both its zero and trigger lines, pointing south as well. These indicators suggest that the rate is picking up downside speed again and support our view for some more near-term declines.
We will abandon our view only if we see a clear break above the 122.32 territory, which held the rate from moving higher on Monday and Tuesday. The rate would already be above the short-term downside line taken from the high of January 17th, and may encourage the bulls to push for the 122.85, marked near the peak of that day and the day before. If the bulls win the fight near that zone as well, then we could see them sailing for the peak of July 1st, at around 123.40.
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