EUR/JPY technical analysis: Approaching the lower end of the bear flag

EUR/JPY seems to have carved out a bear flag on the 8-hour chart.
A break below 122.65 would confirm a bear flag breakdown.

Omkar Godbole FXStreet Contributor

EUR/JPY is on the defensive and could soon drop to the bear flag support of 122.65, courtesy of risk aversion and increased demand for the anti-risk Japanese Yen.

Acceptance below 122.65 would confirm a bear flag breakdown - a continuation pattern which often accelerates the preceding bearish move. So, a flag breakdown, if confirmed, could yield a sell-off to levels below 112.00.

Supporting the bearish case is the below-50 print on the 14-day relative strength index (RSI).

The outlook, however, would turn bullish if the cross rises above 123.08, validating the positive crossover the 5- and 10-day moving averages (MAs) confirmed earlier this week.

8-hour chart

Trend: Bearish below 122.65

Pivot points

1. R3 123.93
2. R2 123.73
3. R1 123.39
PP 123.18
1. S1 122.84
2. S2 122.64
3. S3 122.3

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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